Flipkart takes over eBay India, Amazon to face critical competition on the Indian turf
Category: #retail  By Sunil Hebbalkar  Date: 2017-04-18
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Flipkart takes over eBay India, Amazon to face critical competition on the Indian turf

In a bid to outshine the world’s most popular online retail giant, Amazon, Flipkart has officially acquired eBay’s India operations as of March 2017. India’s largest online retailer has also brought Tencent and Microsoft on board to round off the deal worth USD 1.4 billion.

Always having held the reputation of an exuberant buyer, Flipkart has acquired competitors Jabong and Myntra in the past in addition to other ecommerce giants such as Phonepe, Ngpay, and AdIquity. The market is rife with the recent speculations about Flipkart acquiring Snapdeal as well. If this indeed proves to be true, this online retail giant would have another rival in its kitty, which can only serve to increase the overall profit margins for the company. Besides, this surmised deal may help Flipkart latch onto SoftBank, the Japanese multinational Internet company.

Reliable reports suggest that the announcement of this mega deal between Flipkart, eBay, Microsoft, and Tencent has prompted SoftBank to effectuate a merger between Flipkart and Snapdeal, with a view to counter the presence of Amazon in India. SoftBank is Snapdeal’s largest investor, and a merger between India’s key retail giants is sure to bring in added valuation for the former, in the case that the deal materializes.

The Beginning of the Colossal Agreement

Reports suggest that Flipkart was in talks with eBay since January 2017, however, eBay consented to sell its India operations to Flipkart only by the middle of March 2017. As of April 2017, Flipkart announced the jumbo deal involving Microsoft, eBay, and China’s Tencent, with a valuation of USD 1.4 billion. eBay’s investment in the agreement will round up to USD 500 million, while Microsoft and Tencent will invest USD 200 million and USD 700 million respectively, state sources.

Will Amazon sustain the competition?

This collaboration has tailored the roadmap for fierce competition between major conglomerates on the Indian soil. Amazon will find rivals in regional contenders eBay and Microsoft. Tencent will juggle the race with China’s Alibaba, which holds a huge chunk of the e-commerce industry with its flagship payment system – Alipay. Experts state that Alibaba has had a major hand in transforming the retail market in China ever since its penetration into the Chinese internet shopping domain. The fact that Softbank is one of the prominent investors of Alibaba and is now eager to invest in Flipkart, is an indicator that the latter’s business scope is set to widen on the home ground.

Flipkart’s valuation has now crossed USD 4.5 billion, which is very close to Amazon’s capital investment of USD 5 billion. The Indian retail scenario in the near future will foresee eBay, Flipkart, Microsoft, Tencent, and possibly SoftBank and Snapdeal forming a tenacious alliance to outmaneuver Amazon, which will make it difficult for this retail magnate to continue its dominance in the Indian sub-continent, say experts.

Flipkart’s aim to ultimately emerge as the leading retailer in India is accosted with numerous challenges along the way, one of the immediate ones being, the incorporation of eBay’s local operations. Industry experts predict that the recent deal fostered by Flipkart is bound to threaten Amazon’s growth map in the Indian market and will construe a lucrative revenue chart for Flipkart in the years to come.



About Author

Sunil Hebbalkar

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Sunil Hebbalkar

Sunil Hebbalkar develops content for Algosonline, Market Size Forecasters, and a couple of other platforms. A Post graduate mechanical design engineer by qualification, he worked as an intern at the defense lab for one year in the engine design and development departm...

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