HomeIndustry India e-commerce battle heats up as Flipkart gets fresh ammo to take on Amazon India e-commerce battle heats up as Flipkart gets fresh ammo to take on Amazon

August 11,2017

Compelled to offer big discounts to lure customers to shop online, both Amazon India and Flipkart have been incurring losses. Flipkart reported a net loss of Rs 2,306 crore for the year to March 31, 2016, on revenues of about Rs 1,952 crore. Amazon Seller Services — the marketplace arm of Amazon India — posted revenues of Rs 2,275 crore in FY16, up 122%. During the period, its losses increased to Rs 3,572 crore.
Amazon India recently claimed it has overtaken Flipkart (excluding fashion units Myntra and Jabong) both in terms of value and volume over the past 18 months. In the June quarter, Amazon’s gross merchandise sales (GMS) grew 59% year-on-year while unit sales rose 88%. According to Flipkart the retailer was growing at 60-70% in terms of GMS.
On Thursday Flipkart said SoftBank’s investment, a mix of primary and secondary capital, is part of the previously announced financing round with Tencent, eBay and Microsoft. With this, the total amount raised by Flipkart is almost $7 billion, the biggest raise by an Indian Internet start-up.
SoftBank’s investment, via its $100-billion Vision Fund, makes it the largest shareholder in Flipkart, displacing Tiger Global, which is likely to make a partial exit following the deal. Ten days ago, the merger negotiations between Flipkart and Snapdeal failed; as the majority stakeholder in Snapdeal, SoftBank is believed to have written off its estimated $900-million investment in the firm.
Flipkart co-founders Sachin Bansal and Binny Bansal said very few economies globally attract such overwhelming interest from top-tier investors. Harish HV, partner, Grant Thorton, believes the infusion is a vote of confidence for the Indian e-commerce industry. “ Flipkart will now be able to attract talent after seeing a churn in the management,” he said.
SoftBank has been an early and aggressive investor in the Indian e-commerce and start-up space, investing in companies such as Paytm, Snapdeal, Ola, Inmobi, Oyo, Grofers and Housing.com, to name a few. It had recently invested $1.4 billion in Paytm.
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