Ratan Tata invests in Snapdeal as Tata Value ties up online home sales

Ratan Tata, chairman emeritus of Tata Sons, has invested in Delhi-based online marketplace Snapdeal, becoming the third tycoon to join the country's booming online retail business.

The deal comes a day after Snapdeal and Tata Value Homes, a subsidiary of Tata Housing with focus on affordable housing, announced a partnership to enable users to buy houses online.

Neither Ratan Tata, 73, nor Snapdeal disclosed the amount invested.

Snapdeal's cofounder and chief executive Kunal Bahl termed Tata's investment a validation of the company's growth.

"An investment by a legendary and respected figure like Mr Tata is an excellent validation of our focused strategy on building a long term enterprise and marks the start of a very important phase for the company," said Bahl.

Besides Tata Sons, the holding company of the $103-billion Tata group with interests in businesses ranging from software to salt, traditional retail majors like Reliance and Arvind have also made forays into the fast-growing ecommerce sector.

The announcement comes a day after Snapdeal entered into a partnership with Tata Value Homes to sell apartment units of projects spread across five cities, namely, Bangalore, Chennai, Pune, Mumbai and Ahmedabad (See: Tata Value Homes ties up with Snapdeal for online sales).

As part of the partnership, about 1,000 homes across projects will be put up for sale on Snapdeal. These houses are priced between Rs18 lakh and Rs70 lakh and range from 1 BHK to 3 BHK.

Upon possession of the house, customers buying the house through Snapdeal will get Rs10,000 a month for a year as an assured rent (whether they stay on the premises or lease it out) as part of the online sale deal.

Registered users can book a unit for Rs30,000. The booking amount is, however, not refundable in case the customer does not buy the house.

Tata Value Homes will continue to sell through its own portal as well.

Snapdeal, whose existing investors include BlackRock, Temasek Holdings and eBay, is a four-year-old online marketplace growing at an annual rate of 600 per cent and has recently crossed $1 billion in sales (gross merchandise value).

The marketplace supports the sale of millions of products under diverse categories from over 50,000 sellers and is rapidly adding new categories of products.

Apart from apartments, it has launched a catering supplies segment recently. In the next few months the platform is planning to add 10 more categories.

Bahl has stated in the past that the company will focus on adding new merchants, new categories and focus on mobile commerce to ensure growth.

Snapdeal raised over $233 million this year in two rounds from investors like eBay Inc, Singapore-based Temasek and Wipro chairman Azim Premji's family office Premji Invest.

Market leader Flipkart too raised two rounds of funding this year. In July it raised $1 billion from existing investors and Singapore sovereign wealth fund GIC. Global major Amazon also announced a $2 billion investment for its India operations in July. The sector is set for even larger investments over the coming years.