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BW Businessworld

It's Death By Takeover

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IT was an intended ‘integration' that is fast turning into ‘disintegration'. Employees, suppliers and logistics partners of Letsbuy.com say its new parent, Flipkart.com, which acquired Letsbuy in February 2012, is set to kill the Letsbuy brand soon. Flipkart founders Sachin and Binny Bansal did not respond to BW's emails and phone calls.

On 15 May, Letsbuy was asked to shut down its 3,500 sq. ft Gurgaon warehouse and move all its SKUs (stock-keeping units) to the other warehouse in west Delhi's Kirti Nagar. Of the four warehouses that Letsbuy had in Gurgaon, Delhi, Mumbai and Bangalore, only three are operational now. Also, since Flipkart too has ‘fulfilment centres' in these locations, the remaining Letsbuy warehouses are expected to be closed down soon to save on costs.

Letsbuy's uncertain fate has caused nearly 40 per cent of its 400 employees to quit since it was acquired. The company's co-founder, Amanpreet Bajaj, who continues to handle the operations along with founder Hitesh Dhingra, directed BW to Flipkart for queries on future strategy. Flipkart's vice-president, marketing, Ravi Vora, says, "We are working on the integration and once we are ready with the final plans we will be able to share the details." According to a senior officer at venture capital firm Accel Partners, Flipkart has not laid out the integration strategy yet and is still figuring out whether the two brands can work together. He says the VCs have no role in Flipkart's decision, whether it is to retain the Letsbuy brand or erase it. He, however, believes that Flipkart might integrate the logistics and backend while continuing with a separate Letsbuy website.

Letsbuy employees are, however, certain that the brand will be wiped out. "From the looks of it, Flipkart is going to kill Letsbuy," says a senior officer at Letsbuy on condition of anonymity. "Our orders have come down drastically and we only get new inventory after orders are placed," he adds. Incidentally, Letsbuy is still receiving about 1,500 shipments a day against Flipkart's 30,000 a day. According to Hypestat, Letsbuy.com still receives 1,48,501 unique visitors a day against Flipkart's 4,86,577.









1,500


The number of shipments that Letsbuy receives every day




Earlier in February, both companies had said that Letsbuy.com will continue to operate separately and an integration of its backend — logistics and warehouses — will happen gradually. However, when asked if Letsbuy still stands by the statements, Bajaj told BW that the final integration strategy is being worked out and only Flipkart will be able to answer specifics. 

The Flipkart-Letsbuy deal might have saved the industry sentiment from turning negative for an interim period. But if the Letsbuy brand goes down, it will be a signal for India's nascent e-tailing industry to revisit its business models, strategies and over-valuations to avoid another Letsbuy from drowning! 

(This story was published in Businessworld Issue Dated 28-05-2012)