Take two: eBay is taking another stab at the Indian market

  • eBay was an early mover in India’s e-commerce space, investing $50 million in Baazee.com in 2004.
  • It was unable to make much of a dent in the market and its Indian operations were eventually sold to Flipkart last year.
  • As part of its second attempt, eBay will focus on cross-border retail, and is reportedly considering a merger with ShopClues.
Just when you thought India’s e-commerce sector couldn’t get any more crowded, eBay is said to be planning a relaunch in the country. The US-based e-commerce company, which is primarily known as a consumer-to-consumer service, will part ways with Flipkart next month.

Flipkart will shut the eBay.in portal on 14 August, and replace it with a platform for the sale of used and refurbished goods through its local subsidiary, F1 Info Solutions and Services.

As part of its second attempt to break into India, eBay will focus on cross-border retail - the purchase and sale of goods between businesses in countries that are close to one another. It will not make a solitary go of it, however.

According to media reports, the company is planning to merge with a local e-commerce platform. It has held talks with ShopClues, an online marketplace established in 2011, in this regard. The Gurugram-based ShopClues is reportedly in negotiations with a number of companies for a potential sale.

Early mover, early failure

eBay was an early mover in India’s e-commerce space, investing $50 million in Baazee.com, an auction site, in 2004 - a year in which the concept of online shopping was relatively new. The deal was a landmark one, but unfortunately, it didn’t pan out according to the eBay’s expectations.

The concept of auctions didn’t catch on with the Indian public, who preferred their discounted prices upfront, which led to low volumes. In addition, the rapid turnover of senior managers and cumbersome regulation didn’t help either.

Hence, it was unable to make much of a dent in the market and lost out to other players. In April 2017, eBay’s India operations were sold to Flipkart after the latter completed a $1.4 billion fundraising round from eBay along with Tencent and Microsoft. eBay took an equity stake in Flipkart in exchange for a $500 million investment and a 100% stake in its Indian operations.

The company, remained an independent entity, eventually reaching a customer base of 4 million users. However, after the dissolution of the eBay-Flipkart partnership, its customers will likely migrate to Flipkart’s new portal.

eBay will have its work cut out for it in the short term, which is why it’s keeping its ambitions modest. Cross-border trade is a small piece of the e-commerce market. eBay’s immediate priorities will be to find a local partner and get foreign and local businesses onboard.
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