BANGALORE, India -- Online auction giant eBay Inc. is buying Baazee.com Inc., India's most popular online shopping site, for $50 million to extend its reach in the world's second-most populous country.
The deal is expected to be completed by September, the companies said in a joint statement yesterday.
Internet usage is low in India, a country of more than 1 billion, with only 4 million Internet connections. But eBay is betting on the future. In the Hindi language, Baazee means the prize for a contest or race.
"Although it is early days for e-commerce in India, we believe there is great opportunity over the long term," said Meg Whitman, president and chief executive of eBay, which is based in San Jose, Calif.
Baazee, based in India's financial hub, Bombay, says it has 1 million registered users.
"This acquisition means the Indian online community gets access to the global marketplace," Baazee chairman Avnish Bajaj said.
All items listed on eBay will eventually be made available to Indians through Baazee, he said, and eBay customers in 28 countries will be able to buy goods from India.
Citing studies, Baazee said there are 17 million Internet users in India, and the number is expected to rise to 30 million by 2006.
Many Indians who do not own computers visit cybercafes to browse the Internet.
Most online shoppers buy mobile phones, railroad tickets, clothes, toys, books, and compact discs.
India's National Association of Software and Service Companies estimates that online shopping by individuals will reach $500 million in India by 2006 and grow each year by 79 percent.
The deal excited India's Internet service providers.
"This shows the maturity of e-commerce business in India, though volumes are not yet great," said Amitabh Singhal, president of the Internet Service Providers' Association of India.
Yesterday on the Nasdaq Stock Market, eBay shares rose $1.14 to close at $88.35.