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BW Businessworld

Flipkart: Young Brigade

If the deal with Snapdeal goes through, it should give Flipkart additional firepower to sustain its battle with amazon for a longer period

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Flipkart is an inspiration to many young entrepreneurs who dream of making it big — quickly. After all, since starting up in a two-bedroom apartment in Bengaluru as an online bookstore in 2007, Flipkart today has grown to be one of India’s largest e-commerce players.  Back then, little did people realise that the two IIT-Delhi friends — Sachin Bansal and Binny Bansal — would become two of the youngest self-made billionaires in the world.

Today, Flipkart is marching ahead with aggressive strides to remain in the numero uno position. In April, the company announced the landmark acquisition of the India business of eBay. “The combination of eBay’s position as a leading global e-commerce company and Flipkart’s market stature will allow us to accelerate and maximise the opportunity for both companies in India,” said Devin Wenig, President and CEO of eBay Inc., at the time of acquisition.

In fact, another breakthrough deal could be on the way as news of a possible acquisition of Snapdeal by Flipkart has been doing the rounds in the industry for quite some time now. According to RedSeer Consulting, the deal could give Flipkart a way to expand its supply chain quickly and inorganically by getting access to Snapdeal’s numerous small and big warehouses, especially in Northern India. “Fast deliveries and regional fulfilment of orders have become crucial for e-tailers to achieve both higher customer satisfaction and lower supply chain costs. And this move by Flipkart would be a significant boost in its quest for supply chain leadership over Amazon...” RedSeer states in a press release.

As per latest media reports, Flipkart has revised its buyout offer for Snapdeal to between $900 million and $950 million. Snapdeal, in early July, had rejected Flipkart’s initial bid in the range of $800 million-$850 million as its Board was unsatisfied with the offer. If this deal goes through, it should give Flipkart additional firepower to sustain its bruising battle with Amazon for a longer period.

Despite concerns about investors losing interest and funds drying up, in May, Flipkart also managed to raise a total of $1.4 billion from Tencent, eBay and Microsoft, indicating that there is still money flowing in for companies with high potential. “If you have a good story, if you are actually adding a lot of value for the Indian customer, you will be able to raise money,” Kalyan Krishnamurthy, CEO, Flipkart told BW Businessworld. This investment adds to the existing marquee investors including Tiger Global Management, Naspers Group, Accel Partners and DST Global.  

The latest funding is the largest in Flipkart’s 10-year history as well as in the Indian Internet sector and values Flipkart at $11.6 billion. Flipkart will be using the funds to drive the next phase of e-commerce growth in India as it battles with global e-commerce giant Amazon.

“This is a landmark deal for Flipkart and for India as it endorses our tech prowess, our innovative mindset and the potential we have to disrupt traditional markets,” Sachin Bansal and Binny Bansal, Flipkart co-founders said in a statement. Flipkart remains the undisputed leader in the market and its understanding of the local market coupled with innovation continues to be its core strength. The much-awaited acquisition of Snapdeal will surely be a game-changing deal.