- Ecommerce major Flipkart on Tuesday said it has launched Flipkart Boost, a service-fee modelled programme that aims at accelerating business growth of select digital consumer brands.
- Citing a report by Avendus Capital, Flipkart said that the D2C sector in India is worth $44.6 billion as of FY21 end.
- A majority shareholder in PhonePe, Flipkart brands include Flipkart, Myntra, Flipkart Wholesale and Cleartrip.
Bengaluru based Scapic, is a cloud based platform and will help Flipkart accelerate its efforts towards “deeper camera experiences, virtual storefronts, and new opportunities for brand advertising on its platform.”
Flipkart on Tuesday, said that it has acquired the desi gaming start-up Mech Mocha for an yet to be disclosed sum.
This acquisition also means that Flipkart now also has control over Hello Play, a regional gaming platform run by Mech Mocha.
Hello Play has already released around 10 successful online games such as snakes and ladder, Ludo, Carrom and Cricket.
This deal will give boost to Flipkart’s own user base and help it reach out to consumers not based in Indian cities and look at users from smaller towns and villages.
Flipkart will soon start hyperlocal delivery of groceries and essentials in Hyderabad. In partnership with Spencers, which has 200 hypermarket and supermarket format stores across India. Post this pilot, they will explore pan-India launch.
For the FY ending March 2018, Flipkart’s wholesale arm, Flipkart India’s losses has increased by nearly 750% to over Rs 2,000 crore, while the online marketplace company, Flipkart Internet has reported losses of about Rs 1,100 crore, which is a drop of just under 30% compared to the year before.
Flipkart India’s losses for the financial year ended 2017 had come down to about Rs 244 crore, compared to Rs 545 crore in the year ended March 2016 (source).
Thanks to aggressive marketing and Amazon rivalry.
For how long will this loss leadership continue?
The Walmart – Flipkart deal is NOW official which means that Walmart is acquiring Flipkart and Walmart will pay approximately $16 billion for an initial stake of approximately 77 percent in Flipkart.
Walmart / Flipakrt Deal Details
Walmart’s investment includes $2 billion of new equity funding, which will help Flipkart accelerate growth in the future. Walmart and Flipkart are also in discussions with additional potential investors who may join the round, which could result in Walmart’s investment stake moving lower after the transaction is complete. Even so, the company would retain clear majority ownership. Tencent and Tiger Global will continue on the Flipkart board, joined by new members from Walmart. The final make-up of the board has yet to be determined, but it will also include independent members. The board will work to maintain Flipkart’s core values and entrepreneurial spirit, while ensuring it has strategic and competitive advantages. Closing is expected later this calendar year, subject to regulatory approval.
This is definitely a big big deal for the startup ecosystem (the first mega exit), though we have a different view on that. The deal, we hope will bring more global attention to Indian startups which certainly helps the ecosystem.
Post acquisition, Sachin Bansal will exit Flipkart and will sell his stake for $1Bn ! Which is quite an inspiration for many founders out there.
Video: When Flipkart Was a Startup
Flipkart wasn’t this badass company always – do watch Sachin Bansal talk about Flipkart, the journey and the uncertainty in the market.
This was their first public talk which happened at UnPluggd, India’s largest startup and tech conference.
This is being talked for so many days and Flipkart has finally confirmed this Flipkart Group has raised a total of $1.4 billion from Tencent, eBay and Microsof. This investment adds to an existing group of marquee investors that include Tiger Global Management, Naspers Group, Accel Partners and DST Global.
The latest funding round, at a post-transaction valuation of $11.6 billion, is the largest in Flipkart’s 10-year history as well as in the Indian internet sector. That is, Flipkart is valued at $10.2Bn (pre-money).
Tencent joins as a strategic investor, bringing experience in linking social networking and e-commerce.
The investment by eBay is accompanied by a strategic commercial agreement with Flipkart. In exchange for an equity stake in Flipkart, eBay is making a cash investment in and selling its eBay.in business to Flipkart. eBay.in will continue to operate as an independent entity as a part of Flipkart. Flipkart and eBay have also signed an exclusive cross-border trade agreement (we think this is a bad idea).
The eBay India deal almost feels like this.
As a result of the partnership between Flipkart and eBay, customers of Flipkart will gain access to the wide array of global inventory on eBay, while eBay’s customers will have access to more unique Indian inventory provided by Flipkart sellers. Thus, sellers on Flipkart will now have an opportunity to expand their sales globally.
What about Flipkart’s acquisition of Snapdeal ?
In an effort to improve customer experience, the online marketplace is shifting its focus back to become an inventory-based company, with the prime concentration on metrics such as product quality and delivery speed.
Reportedly, the company’s reputation with customers has taken a huge hit, ever since it attempted to become a marketplace, which saw a slowdown on its product delivery time, and poor product quality.
Apart from this, Flipkart’s CEO, Binny Bansal has also announced 2 of his other top priorities to put the company on track:
1) Monthly gross sales of Rs 3,700-3,800 crore by expanding sales of smartphones, large appliances and fashion
2) Break even at gross profit level, by cutting expenses.
Amazon could be on its way to pip Flipkart as the top e-commerce seller in India.
Amazon’s gross sales in July were above Rs 2,000 crore, while Flipkart’s gross merchandise value (GMV) for July were reportedly less than Rs 2,000 crores.
However, these numbers exclude revenue from Jabong and Myntra, fashion retailers owned by Flipkart.
Sachin Bansal soothed many a frayed nerves, disclosing recently, that he was replaced as the CEO of Flipkart because of performance issues.
The candid confession could help boost employee morale when there is considerable downsizing happening in the organisation on one side and its battle with Amazon getting heated up on the other .
We had earlier reported that IIM-A has written a letter to Flipkart and asked to either higher the compensation amount or shorten the delay in joining dates, after Flipkart deferred the joining dates by 6 months.
Here is the context of the letter which was sent to Flipkart by IIM-A. The letter was first accessed and published by Economic Times.
From: IIM A chairperson
To: Binny Bansal and Nitin Seth CC: Flipkart directors, placement head and placecom representatives of all colleges Subject: 7 months delay in joining of management trainees at Flipkart
Dear Binny and Nitin,
It really saddened me to read an email (please see below) sent by Flipkart campus team on Friday night. You had earlier promised to give joining in July to our students but now it has been delayed till December 2016. Let me assure you that not only students of IIM-A but all the other students from the different campuses are in shock to see such a mail from a well established name like Flipkart.
This sudden decision will bring below changes:
1. A strong brand attracts the best of talent on any campus, anywhere in the world. Most of the students had chosen Flipkart over other well reputed recruiters on campus because of the strength of the brand Flipkart. Your decision to defer the date of joining, comes as it does so close to the earlier promised date of July 2016, is sure to make this talent pool regret their well thought out decision.
Talented students fresh out of campus, on the eve of starting successful careers, feel cheated out of multiple opportunities that the campus had to offer, through no fault of their own, just because they chose Flipkart.
With campus perception of recruiters trickling down from one batch to the next, this can significantly hurt the brand Flipkart on campus during subsequent rounds of campus hiring in the years to come.
2.With the need to service heavy educational loans that most of the students have taken, it stands to reason that the Flipkart’s decision of deferring joining by seven months puts a lot of personal finances (and by extension careers) in jeopardy and is bound to cause a lot of duress for the students and their families. The amount of 1.5 lakhs offered as joining bonus hardly qualifies as compensation for seven months of forced unemployment.
3.Future engagement of Flipkart with b-school campuses is bound to get affected as a relationship based on mistrust and lack of transparency can never be mutually beneficial.While we understand that restructuring calls for tough decisions in an organisation, the matter of campus hiring could have been handled much better with campuses forewarned well in advance and engaged as partners in this decision making. Rude shocks due to unilateral decision making does little to help strengthen relationships with the campus.
All of these points only summarise that this decision is going to impact Flipkart, b-schools and most importantly talented students and their families in a very negative manner.
Hence all placement heads and placement committees of all colleges have decided to come forward in support of our students and would like to have a common conference call with you so that we can find a more amicable solution. We request you to consider the following options:
1. An undertaking signed by the CEO guaranteeing that every one of these students will be absorbed when the date of joining is finalised no later than December
2. Either the period of deferment needs to be scaled down or the quantum of compensation for deferment needs to be ramped up (Rs 1.5 lakh for a period of seven months is, to put it mildly, utterly unacceptable) to reflect x% of package.3. The payment of the compensation shall commence on a monthly basis starting July and not as a lump sum amount as joining bonus or arrears.As previously mentioned, we would appreciate a speedy response from your side regarding scheduling a conference call in the next couple of days, where all the relevant stakeholders (Flipkart management, placement chairpersons of the campuses, Placecom representatives from the campuses, representatives from Flipkart new joinees) can engage to reach a mutually acceptable solution.We hope that working together, we can keep the matter from escalating to a wider audience. Our only objective is to protect the careers of our students.
Flipkart has assured that all the students will be recruited but no extra compensation will be given as asked by the institute. But all IIMs and IITs are now cautious and also trying to bring a solution for the students and as well as remove Flipkart from the Day 1 slot.
What’s your take on this matter?
After receiving a strong worded letter from IIM-A, IITs may now remove Flipkart from the Day One list of the campus placement programs.
The All-IITs Placement Committee which comprises of all the placement cell heads across all IITs, will meet soon and reach a consensus regarding the Flipkart issue.
The companies usually prefer the day 1 slot so as to pick the best out of the lot. Flipkart was so far given the day 1 slot in almost all the IITs, except a few.
After the letter from IIM-A, IIT-B is also planning to send out a similar email to Flipkart, asking them to reduce the deferment period or else increase the compensation amount.
However, Flipkart has assured that the trainees will be onboard by December 2016, after the entire restructuring process is completed. With the intensifying pressure on the e-commerce player to reduce its cash burn, the skepticisim and the concerns are inevitable.
After informing IIM-A that joining dates of new recruits have been deferred from June to December, e-commerce giant Flipkart received a strong email from the institution asking to guarantee the job.
The company had cited the reason as restructuring for this move.
The letter which was addressed to Chief Executive Officer Binny Bansal, Chief People Officer Nitin Seth and Executive Chairman Sachin Bansal among others, said that the delay should be shortened and also 1.5 lakh as compensation is not acceptable. The company should pay monthly, starting from June, added the letter.
The institution has also asked for a conference call where all the stakeholders can participate and find out a solution with mutual consent.
Other B-schools including IIMCalcutta, IIM-Bangalore, IIM-Indore, Faculty of Management Studies, Delhi, TA Pai Management Institute and Tata Institute of Social Sciences, have also been informed and asked if they would be interested in joining the call.
The e-commerce player has been restructuring its business model with a shift in focus and has been trying to curb cash burn. So far, Flipkart has been a preferred employer with the high packages offered and the strong brand name. But, with the new market scenario Flipkart may halt its aggressive hiring and lower its offerings too.
Ekart, the logistics arm of Flipkart aims to ramp up the game of logistics industry with this new venture Ekart Courier which will be a direct consumer facing business with an objective of structuring the fragmented courier market in India.
Ekart, through this service will deliver across 3800+ pin codes with pick-ups enabled in eight cities by June 2016.
The service will allow users to drop a pin for both the pick-up and delivery addresses on a map that is provided by the FLIP (Flipkart’s mapping platform) which will significantly solve the issues of pincode-address mismatches, reduce misrouting of couriers and improve reliability.
This will soon be coupled with RFID and GPS based real time tracking enabling users to visualize the courier’s journey over the map further enhancing the existing track and trace.
Ekart Courier also offers consumers the benefit of 24×7 online booking on Mobile and Website, slotted door-step pick-up, free and reliable packaging, transparent pricing and assurance on delivery time.
We had earlier reported Flipkart is realigning its business strategies and also focusing on its logistics arm. The B2B platform had earlier opened up to third-party players as well as for offline commerce.
- So Flipkart lost Moto account to Amazon. Not just monetary loss, but a big blow to Flipkart (for sure).
- Now that Amazon is all geared to launch the new Moto devices, Flipkart runs print/online ads in order to spoil Amazon’s party (with some massive discounts on older Moto devices).
- Amazon, on the other hand allegedly paid influencers / promoted tweets to ensure #SoreLoserFlipkart trends.
And it’s trending.
A bit of ambush marketing – but fall from grace (for both)? What’s your take? What exactly are they trying to prove by bringing each other down? Does this speak of insecurity they are going through ?
- Flipkart’s Two More Investors Marks Down Stake By 20%
- Tiger Cuts its stake in Amazon
Checkout the drama from both sides (grab some popcorn).
— fazal c (@fzlc) May 18, 2016
— Shubham Gupta (NeO) (@shubham_neo) May 18, 2016
— Rizwan Siddiquee (@BinaryGru) May 18, 2016
— Rohit . . 🇮🇳 (@vickyrohit9) May 18, 2016
— Mayank (@krmayank13) May 18, 2016
— rohit yagnik (@rohittrix) May 18, 2016
After Morgan Stanley and T Rowe Price, Flipkart’s investors Fidelity Rutland Square Trust II and Valic Co have now marked down the value of their holdings in the company by 20%.
Mutual fund Fidelity Rutland Square Trust II has marked the value of their shares at $82 per unit for the February ended quarter which is down by 21.1% from $103.97 per unit in August. In the previous quarter also, Fidelity had marked down its shares in the e-commerce company by 24%.
Valic Co has marked down their Flipkart shares at $98.19 per unit for the February ended quarter, down by 20.2% from $123.11 in August. Valic also had marked down its shares by 12% in the previous quarter.
Both the companies had invested in Flipkart in Series D in 2013 and together hold less than $6 million.The company’s last funding was raised at a valuation of $15 billion.
Flipkart has been looking to raise fresh funding since last year but the slowdown in funds and the consecutive markdowns has been creating constant hurdles for the company. With the new leadership, the company is shuffling its business priorities and trying to bring a sustainable model.