28/07/2015 12:04 PM IST | Updated 15/07/2016 8:25 AM IST

Flipkart And Pepperfry Draw More Funds To Keep Pole Positions

An employee processes orders in the new 10,000 m2 warehouse of online private sales website '' in Montagny-les-Beaune, central-eastern France, on April 17, 2015. The new site can process up to 10,000 orders a day, and is dedicated to gastronomy and wine business. AFP PHOTO / JEAN-PHILIPPE KSIAZEK (Photo credit should read JEAN-PHILIPPE KSIAZEK/AFP/Getty Images)

Threatened by rising competition from rivals with the massive funds being amassed on a war-footing, existing market leaders are making sure they have enough to retain their positions in the fiercely competitive e-commerce industry.

Pepperfry, which sells furniture, home decor and appliances online, has raised $100 million (Rs 600 crore) from Goldman Sachs Group Inc and Zodius Technology Fund. Existing investors Norwest Venture Partners and Bertelsmann India Investments have also participated in this round, the company said in a statement.

Unlike Urban Ladder, which owns the process chain from design to delivery of the product, Pepperfry is a marketplace where over 1,000 merchants sell furniture items. The new funding will help it fend off competition from Urban Ladder, which has raised $77 million in four rounds so far. It will also enable it to open more distribution centres and expand its logistics network that comprises around 300 vehicles. The company will also open more physical outlets — to 15 from the present 6 — where potential customers can experience a product before ordering it.

Much of the furniture ordering depends on the experience of customers on websites. Urban Ladder has been beefing up its technology team, its co-founder Rajiv Srivatsa told HuffPost India, to offer a richer experience where users can create visualisations of how furniture will look in their virtual living rooms.

Pepperfry is not holding back, and will grow its tech team by four times, using this new round of funding, said founder and co-CEO Ambareesh Murthy.

Apart from existing competitors, Flipkart and Snapdeal and Amazon are also venturing into the lucrative market for customisable kitchens and home-design solutions. Pepperfry will have its hands full in maintaining its current leadership status by sales in the largely unorganized furniture market that is worth $30 billion. Customers currently purchase $500 million of that online.

Meanwhile Flipkart, India's largest online retail marketplace, is making sure it has the money to take on Amazon, which will invest as much as $5 billion in India, the last market with a billion potential customers. The Economic Timesreported that the company, registered in Singapore, has raised $700 million (Rs 4,500 crore) from investors including Steadview Capital.

It will need all of it to compete with Amazon, which sees India as its second-largest potential market outside its home base of United States after being "surprised" by the pace of growth here. "When we see a positive surprise we double-down on it. That's kind of our policy and India is that kind of surprise," said Brian Olsavsky, Amazon's chief financial officer during its second-quarter earnings call. In May 2015, Amazon had 23.6 unique visitors compared with 23.5 for Flipkart. In addition to that, Alibaba, which bested Amazon in China, is beefing up its involvement with PayTM.

Such investments from bullish investors will enable e-commerce players to grab a bigger slice of India's e-commerce market, which is expected to be $137 billion in the next five years from $11 billion in 2013 according to a June report by Morgan Stanley.

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