Flipkart’s $1 billion boost will come handy in war against against Amazon, Snapdeal

Flipkart has raised $1 billion at a valuation of $10 billion and plans fundraising for a similar amount in the coming months, Bloomberg reported quoting sources privy to the developments.

Written by Kanishka Singh | New Delhi | Published:March 20, 2017 7:19 pm
Flipkart, Online company, Flipkart struggle, amazon, Flipkart amazon, online shopping, india news Photo for representational purpose

Flipkart has raised $1 billion at a valuation of $10 billion and plans fundraising for a similar amount in the coming months, Bloomberg reported quoting sources privy to the developments. The 10-year-old Indian e-commerce giant has struggled recently and dropped at least $5 billion in valuation since 2015 according to market speculation. This fundraiser may just give Flipkart an extra fillip of ammunition to go against one of its main Indian e-commerce rivals Snapdeal.

The major competition to Flipkart in the ecommerce space is Amazon India and the company has pumped huge investments into India which it views as a priority market. Owner Jeff Bezos and his global e-commerce powerhouse have the financial might to fuel Amazon India ahead of competition. According to Bloomberg, backers in this round of fundraising included Microsoft Corp., EBay Inc. and Tencent Holdings Ltd.

Flipkart has recently struggled financially–partly due to profitability issues and also sudden disruptions in the deep discount wars to win the lion’s share of the market. Tiger Global Management installed former EBay honcho Kalyan Krishnamurthy as the third chief of Flipkart in a year and after a tough period of pruning senior management, beefing up sales and traffic targets and changing business processes, Flipkart managed to beat Amazon by the skin of the teeth in the year-end shopping rush.

The recent investments will, however, inject confidence in the market in terms of capital raising. Amazon, meanwhile, has indicated plans for $5 billion investment in its India operations in the coming few years. On the other hand, Snapdeal, which was struggling is backed by another global ecommerce and investment giant Alibaba. The same company, which also backs Paytm, outmuscled eBay and Amazon from China and the latest movement around Flipkart is set the shake up the competition.

Flipkart’s rivals have deep pockets and the fact that Amazon India’s chief Amit Agarwal was elevated as Senior Vice President at Amazon.com Inc. global shows how efficiently Amazon is taking over the ecommerce space in India. Agarwal has been awarded for the same.

The cumulative losses of Flipkart, Amazon and Snapdeal in 2015 stood at ₹5,000 crore with Flipkart’s share of ₹2,000 crore thanks to the discount wars they are habituating the Indian market to. Investors are now showing revived confidence and it seems Flipkart will offer some bite in its fight against the likes of Amazon.

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