Flipkart Forges Multi-Billion-Dollar Deal with EBay and TenCent to Gain Competitive Edge Over Rivals

To gain a competitive edge over rivals Amazon and Alibaba, Flipkart is in talks to seal a funding round of up to USD1.5 billion

India: The US based eBay and China’s Tencent are the main investors in the transaction that could well establish the Bengaluru based company in the American online marketplace. The discussions, if successful, will enable Flipkart to compete with its two main rivals – Amazon and Alibaba.

Flipkart last fund raising round was in 2015, when Qatar investment authority, Tiger Global and the other existing investors valuated the funds at USD15 billion. Since then, the company has been facing a funding drought and has not been able to secure a leading position in the ecommerce industry. Moreover, increasing investment from Alibaba and Amazon on its Indian operations in 2016 also dwarfed the competition from the Bengaluru based ecommerce company. However, the negotiations are expected to bring up the valuation of the company between USD10-12 billion, with eBay likely investing USD400-500 million. Moreover, the company has been in advanced talks with multiple investors for fresh capital after talks for billion-dollar infusion with Walmart fell through last year.

TechSci Research depicts that the ecommerce industry in India is one of the fastest growing industry and one of the most lucrative for companies operating worldwide. Flipkart has been constantly outpaced by the Chinese and American companies in terms of business as well as investments. Amazon increased is commitment to Indian ops from USD2 billion to USD5 billion in June 2016. Alibaba has also entered the competition by pumping an investment of USD177 million in Paytm mall earlier this month. These investments coming from eBay and Tencent will help Flipkart improve its supply chain by improving logistics, warehousing, IT operations which in turn will drive the business for Flipkart in the booming Indian ecommerce industry.

According to a report published at TechSci Research, India E-commerce Market Forecast & Opportunities, 2020”, the country’s e-commerce market is projected to grow at a CAGR of more than 36% during 2015-2020. E-services segment, which comprises online travel, online payments, online classifieds, etc., is expected to continue its domination through 2020. However, the e-tail segment that includes electronics, apparels & accessories, health and personal care, etc., is expected to witness significantly higher market growth compared to e-services segment over the next five years.