The state of e-commerce: M&A surging, daily deals still big

Online Shopping

It’s been a big part of the Internet picture for well over a decade, but right now e-commerce is really hitting its stride, according to a new report out of CB Insights and the BizTech@Wharton Conference.

The overall investment of venture capital in the e-commerce field has hastened recently, according to the report. After more than a year of relative weakness, e-commerce began attracting lots of VC money in late 2010. Although the investments declined quarter-over-quarter in the third quarter of 2011, the quantity of deals and total dollars invested was still more than double what it had been during the third quarter of 2010:

Those investment dollars are apparently just following the action: Mergers and acquisitions in the e-commerce space have especially taken off over the past 24 months, the report indicates. Far and away the biggest driver of e-commerce M&A is the daily deals sector, which has accounted for 74 M&A transactions since the beginning of 2008:


It’s clear that discount e-commerce sites — particularly those that offer daily deals and flash sales — have grown significantly in recent years. While the amount and number of investments in daily deal companies dipped slightly in the most recent quarter (perhaps due to a fear of “fatigue” about such sites) flash sales companies are attracting more money than ever:

Now, of course, venture capital investment does not always translate into a sector’s full-on success. But it does indicate that there’s optimism that it has lots of room to grow. E-commerce proved to be a bigger factor than ever for shoppers over this year’s Thanksgiving weekend, the time that kicks off the annual holiday shopping season. If these investors are on target, the strength we’re seeing from online shopping now could be just the beginning.

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