Flipkart, often referred to as India’s Amazon, has raised $150 million from Accel Partners and Tiger Global Management. This is the biggest funding ever raised by an Indian eCommerce company. This is also the biggest funding raised by Flipkart, five times over the funding it has raised so far. It has raised $31 million in its previous rounds. This new funding values the company at $850 million.

Image Source : Forbes

A big day for Indian eCommerce

Though the new valuation doesn’t make Flipkart a billion dollar baby, it gives much hope to the eCommerce fraternity in India. Mind you this fraternity is growing and also shrinking at the same time. Growing by the number of new ventures launched and shrinking by the number of ventures closed. There are casualities to the eCommerce exuberance and there are new stars rising every day.

In 2011, a total of $500 million went to Indian eCommerce sites through 67 deals. A much higher number when compared to 2010′s $112 million. (Via)

This should be good news for Indian eCommerce sites which are waiting for funding or waiting for someone to gobble them up. Indian eCommerce has become an enigma. Quite a few people have weighed in with their top eight or top 10 reasons why this is a bubble or this is not a bubble. Terming something a bubble is fancy and glamorous. So is terming something as irrational exuberance or just exuberance. Truth is, no one really knows. By the time people know something, it is too late and the expert comments are washed away by the collective amnesia.

India’s eCommerce Turmoil

Instead of calling it names what I would say is Indian eCommerce is in turmoil right now. Nobody is really sure what really works but they want to try it out and see if it sticks. Some want to sell shoes, some want to sell groceries and some want to sell pots. It’s all good. Whatever can be sold will be sold online, but only so much. There are limitations to both the products that can be sold online and the models being used.

What everyone has to realize is that someone can’t really buy a dress shirt or a shoe without actually trying it. At least I can’t buy it. I might take a risk with a 250 rupee T-shirt but not with a pair of shoes which cost me Rs.2000. Though Flipkart and many others are selling mobile phones, a mobile phone is still a touchy feely thing. I really want to hold a mobile even if it’s an iPhone 4S. I just want to be comfortable with it. This kind of stuff is the most challenging thing for selling a product online.

On the contrary there are products like underwear’s and condoms which are best bought online. Many Indian eCommerce sites don’t seem to be getting this concept. There is a concept called Omni Channels which is getting popular elsewhere. This is the method of selecting a product online and trying it physically in the store. This reduces the selection time and focuses on customer communication.

You still can sell anything you want online. What you also need is a good model to go with it. Unfortunately this model hasn’t arrived for all the products that are being sold online.

Flipkart has clearly said that it will not sell automobiles and groceries. That kind of clarity is needed for any player.

Not too fast. Amazon’s coming

Till now Indian eCommerce was paired with words like bubble or burst. Now a new word will be heard: Amazon. Amazon is the 800kg gorilla in the Indian eCommerce mind space right now. Flipkart’s mega funding is also a response to the Amazonian threat. Amazon will enter someday and the eCommerce space will be quite different. What changes will Amazon bring? Nobody really knows. Many eCommerce shops are waiting or hoping for a payday with Amazon. As for Flipkart, it’s making all the right moves.

Image source : Forbes