The Indian biggest e-marketplace, Flipkart, headquartered in Bengaluru, shaped by IIT graduates as online bookstore came into existence in the year 2007 created benchmarks in e-commerce market in India.
The historical deal:
The world’s largest retail company, Walmart announced the biggest deal to acquire a 77% stake in Indian retail flag bearer Flipkart, counted as a positive deal for online-offline retailers. The company now valued $20 Billion is regularly backed by the investors and expanded its categories is known for its firm-footed placement in growing e-commerce retail in India and doing its basics right from its inception, incoming regular investments are paying fruitful to the company in tougher competition to local rivals and global giant Amazon.
Facts: India’s retail market is estimated at $470 billion in 2011 and is expected to grow to $675 Bn by 2016 and $850 billion by 2020, – estimated CAGR of 10%. According to Forrester, the e-commerce market in India has grown the fastest within the Asia-Pacific Region at a CAGR of over 57% between 2012–16.
The building of biggest e-marketplace:
Right from the start, the company was in the safe hand of Sachin and Binny Bansal and thereafter the wheel of fortunes brought wonders for India’s own e-commerce platform in the shape of the biggest profitable venture. Today, Indian e-commerce industry is already close to USD 30 billion in size and analysts expect this to zoom to USD 200 billion by 2026. The world’s biggest deal for Flipkart announced in May 2018 by Walmart $16 Bn deal proves its metal to global e-commerce market and the profitable exit to investors that will benefit directly to the expansion of the company in the cause of forming biggest shopping platform for Indian buyers. The Flipkart’s top investors SoftBank, Naspers, Tencent and US technology giant Microsoft have secured handsome returns from the Flipkart-Walmart deal.
Going bigger Going global:
The global retailer Walmart is now controlling 77% stake in one of the biggest e-commerce company and it can open push overall market with this entry after best attempts that failed in 2007 but walking out with JV with the Bharti group, in the fierce time of foreign direct investment (FDI) in the multi-brand retail sector. Now, the battle is between the US retail giant Amazon that reportedly has pumped fresh capital of $3.86 Bn into its India business unit, Amazon founder Jeff Bezos has committed investments to the tune of USD 5 billion for the Indian market.
Facts: Flipkart is among India’s most-funded startups, having raised around $3.5 billion in 12 rounds, according to online startup database CrunchBase. Snapdeal has tapped the market 11 times but could raise only $1.7 billion.
The BIG F(AT)lipkart:
Acquisition in years:
2011– Mime360.com, Bollywood portal Chakpak
2012– flyte online music store, online electronic retailer Letsbuy
2014 – Fashion retailer Myntra for `20 billion, Partnered with Motorola mobility for an exclusive retailer of Moto G smartphone.
2015– Digital mapping provider Mapmyindia.com, Appiterate, a Delhi-based mobile marketing automation firm
2016– Online retailer Jabong from Rocket internet $70 M., Payment startup PhonePe
2017– Flipkart made a US$2 million investment in parenting information startup, Tinystep
In April 2017, eBay announced that it would sell its Indian subsidiary eBay.in to Flipkart and make a US$500 million cash investment in the company.
In July 2017, Flipkart made an offer to acquire its main domestic competitor, Snapdeal, for around US$700-800 million. It was rejected by the company, which was seeking at least US$1 billion.
2008: Ashish Gupta, founder of Junglee and Helion Venture Partners funds Flipkart initially.
2009: Accel India, the venture capital firm, provides the first institutional round of fund of $1 million. Flipkart also received $10 million from Tiger Global Management. The valuation of the company was reported to be a bit lower than $50 million.
2010-11: Flipkart raised $20 million from Tiger Global and begins talks with private equity funds like General Atlantic. The valuation of the company then was $1 billion.
2012: Flipkart became a unicorn startup. It announced $150 million round led by South African tech major Naspers. The valuation of Flipkart back then was $1 billion.
2013: Flipkart raised $200 million from existing investors in mid-2013. The company also raised $160 million more from Morgan Stanley, Sofina, Vulcan Capital, and Dragoneer. The valuation fo Flipkart was reported to be $1.6 billion. During this period Flipkart worked on changing the business model.
2014: Following the acquisition of Myntra in that year, Flipkart raised $210 million from DST Global. The valuation then stood at $2.6 billion.
2014: This was a piece of history as Flipkart witnessed a whopping $1B funding round from GIC Singapore and existing backers like Naspers, DST Global, and Tiger Global. Even the valuation shot up 1.5 times and stood at $7 billion, within the span of less than quarter of a year.
2014: Flipkart raised a $700 million fund from hedge funds like Greenoaks, Steadview Capital, sovereign wealth fund Qatar Investment Authority, mutual fund T Rowe Price. Flipkart’s valuation again increased to more than $11 billion.
2015: Flipkart reached the highest valuation at $15.5 billion. It also raised $700 million from all the existing investors.
2016: This was a bad year for Flipkart. The company received the first big markdown by a Morgan Stanley Mutual Fund. This time the valuation stood at $11billion.
2016: The markdowns kept continuing by various mutual fund investors like Vanguard, T Rowe Price, and Fidelity.
2016: This time Valic, the US fund, marked up the valuation of its shares in Flipkart by 10 percent. Now, the valuation of the company was $11.5 billion.
2016: A Morgan Stanley Mutual Fund made another considerable cut to the value of its Flipkart shares. The valuation was now a mere, $5.6 billion.
Facts: About 13,685 startups were formed in India in 2015, of which about 20% were e-commerce companies, shows data from business research platform Tracxn. In 2017, as India’s internet ecosystem undertook a massive cleanup both in terms of quality of businesses and quantity of capital invested, that number nosedived to 2,671.
A revival moment:
It is estimated that Indian domestic organized retail industry that is estimated to more than double in four years to about $115 billion by 2020 is positive news.
The Flipkart-Wallmart deal is a moment of consolidation to the Indian online market which is going through the correction and now on the upward direction going eye-catching for the global investments.
This deal orchestrates the positive vibes for the FDI and billions of dollars are still waiting for approval in the retail market. The government’s Make in India scheme with getting benefitted (i.e. Single/Multibrand entry, Jobs in retail sectors, boost to farmers, growth to the economy, domestic retail boost)
It will boost probably on the larger platform where other sector related to the retail will get the positivity such as Agri, Food processing, Manufacturing, Export, etc.
The business model like Flipkart is a study of years on dealing in the domestic retail market and their ex-employees are making a mark with their successful startups in the e-commerce market. It is time to think big, dream big.
It is the biggest deal in the Indian e-commerce history and concluded with the profitable exits for the investors, (Softbank and eBay) to fillip overall Indian e-commerce with further International investors with positive notes. This deal has shown path Indian retail sector, which is comparably small but potential to perform tremendous growth.
Further, this deal will pacify competition between the Reliance, Tata, Avenue, Aditya Birla, Metro and Future Retail. It will directly benefit the consumers with better services and good choice of products.