Ecommerce firms like Flipkart, Snapdeal to give big push to small firms developing software products
Last year, e-commerce took a lion's share of venture funding, leaving little for young technology companies. But this year, the same sector will be the one giving a big push to small firms developing software products.
These firms are relying on tech products that range from the fantastic photo shoot animation, drone delivery to core enterprise products.
"We are always scouting for startups and we will not shy away when an opportunity presents itself," said Sameer Nigam, vicepresident of engineering at Flipkart. Last month, the seven-yearold company raised $700 million at a $7 billion valuation towards making long-term strategic investments in India and bulking up its technology capabilities.
Over $3.1 billion was pumped into 46 deals in the ecommerce space last year. Software product companies received just about one-tenth of that, across 48 deals, according to research firm Venture Intelligence.
Both Flipkart and Snapdeal have acquired five technology companies since 2010. But that number is likely to rise this year, as new rounds of capital infusion gives them enough ammunition to remain ahead of the curve.
Flipkart said its core focus in 2015 will be about bringing more sellers online. At the heart of it, Flipkart and Snapdeal own little inventory of items and have a technology platform that allows third-parties to sell online. Greater the number of sellers, greater is a customer's choice on the website. Innovations including intuitive tools that help third-party sellers to rapidly adopt technology is something Flipkart said it was keen to look at.
The demand for such products is so obvious in the industry that top executives of such firms are branching out to setting up ventures." The capacity of a seller to make sense of e-commerce is very low. We provide the platform to help them jump on the e-com-cofounder at Sellerworx. He served as director at Flipkart until early 2014. Snapdeal, on the other hand, said it is keen to look at training solutions or engagement tools that keep sellers active on their platform.
"In addition to getting them onboard, it's also a priority to keep them active," said Snapdeal's Ankit Khanna. The senior vice president of product management said the company has worked with at least 8-10 startups in the past year for various solutions.
Last year, Snapdeal acquired a technology platform Wishpicker for gift recommendation and fashion products discovery site, Doozton. com. And experts say more are on the way.
Besides focusing on the seller ecosystem, Flipkart said making products available in different languages, and building services like delivery based on a mobile phone's location are all interesting areas. Social collaboration in shopping, and sentiment analysis are also a few areas in the mix.
Arvind Singhal, chairman of advisory firm Technopak, said one of the areas that e-commerce companies still struggle with is payments. To that end, Snapdeal wants to find a way for customers, without a credit or debit card, to make upfront payment in a cashless manner.
Handling customer complaints effectively and using technology to automate a bunch of processes are also areas that Singhal highlighted.
While horizontal companies are addressing problems at a macro level, vertical players are looking for very niche technology products to differentiate their offering. For example, furniture retailer Urban Ladder has exclusive rights to a virtual trial room product that Bengaluru-based Whodat has developed. Its product allows users to visualize how the product would look at different part in one's household. The year-old company is profitable and has already attracted several buyout offers from its clients.
Urban Ladder has also set up "UL Labs" to work closely with startups and get a mindshare in the entrepreneurial community.
Visual image search, where one can click a picture and search for an object, animation for photo shoots, and video analytics in its warehouse are a few things that would attract fashion retailer Jabong's attention.
"Definitely. We are always looking for interesting companies to acquire," said CEO Praveen Sinha, co-founder and managing director of Jabong. The company, which has previously used drones to transport small packages from one warehouse to another, said it was looking for more innovation to stand out in the crowded clothing e-commerce space.
"It's not our forte to build these tools. Innovation will come only from these startups," said Ankit Khanna of Snapdeal, which has worked with at least 8-10 startups in the past year for various solutions.