Flipkart Raises $3.6 Billion As it Races with Amazon for Indian Market

Flipkart Raises $3.6 Billion As it Races with Amazon for Indian Market

Besides fintech, e-commerce is another burgeoning market defying the pandemic. Led by America’s Amazon, the market has maintained significant growth in the face of the pandemic, buoyed by the shift to online shopping.

While Amazon leads the market, other players in the market including China’s Alibaba and India’s Flipkart have recorded great market feats that include huge fundraising in the middle of global health and economic crisis.

On Monday, Flipkart announced a new round of $3.6 billion at a post-money valuation of $37.6 billion as race to dominate the Indian market heat up between the Indian startup and Amazon. TechCrunch noted that the funding is widely believed to be the pre-IPO round for the Indian e-commerce conglomerate as it works to list in the public markets as soon as early next year.

The new round of funding, which was led by GIC, Canada Pension Plan Investment Board (CPP Investments), SoftBank Vision Fund 2 and Walmart, along with investments from sovereign funds DisruptAD, Qatar Investment Authority, Khazanah Nasional Berhad, Tencent, Willoughby Capital, Antara Capital, Franklin Templeton and Tiger Global, is by far the largest for any Indian startup.

Per TechCrunch, the Monday investment marks the return of SoftBank as a shareholder of Flipkart. SoftBank, which had taken the exit from the startup when the Bangalore-based firm sold majority stakes to Walmart in 2018 at a valuation of $22 billion, has reinvested about $500 million in the new round.

“At Flipkart, we are committed to transforming the consumer internet ecosystem in India and providing consumers access and value. This investment by leading global investors reflects the promise of digital commerce in India and their belief in Flipkart’s capabilities to maximise this potential for all stakeholders,” said Kalyan Krishnamurthy, Chief Executive Officer at Flipkart Group, in a statement.

“As we serve our consumers, we will focus on accelerating growth for millions of small and medium Indian businesses, including kiranas. We will continue to invest in new categories and leverage made-in-India technology to transform consumer experiences and develop a world-class supply chain.”

Krishnamurthy said on Monday that Flipkart is also giving its employees the option to sell their stock options worth $80.5 million, as part of the new fundraise.

The $3.6 billion has greatly eclipsed Flipkart’s earlier attempt to raise money this year, looking to raise just about $1 billion.

Amazon has invested over $6.5 billion in the South Asian market in an attempt to rule the booming Indian market, an attempt Flipkart is aiming to thwart with the new funding.

Both the firms are struggling to aggressively expand their footprint in India, but they also have a third entity to reckon with.

E-commerce platform JioMart, a joint venture between Reliance Retail (India’s largest retail chain) and Google and Facebook-backed Jio Platforms (India’s largest telecom operator), launched last year in over 200 cities and towns across the nation.

Though India is a huge brick and mortar country, where physical stores continue to drive the vast majority of retail sales, it is becoming one of the world’s fastest-growing e-commerce markets.

The e-commerce market is poised to grow even further as India unveils its digital economy. Although its economy has come under pandemic-induced turmoil, India’s digital economic future is poised for a lift as more first-time internet users begin to shop online.

India’s e-commerce market is estimated to reach more than 300 million shoppers by 2025, according to estimates by Bain & Company. These shoppers would have bought items worth more than $100 billion from online platforms, the firm projected.

As the race between Flipkart and Amazon continues in India, both firms are pushing to gain the market with enticements. Recently, both of them have, besides rolling out support for Hindi language, partnered with neighborhood stores.

“Flipkart is a great business whose growth and potential mirrors that of India as a whole, that’s why we invested in 2018 and why we continue to invest today,” said Judith McKenna, President and CEO of Walmart International, in a statement.

Flipkart says it has amassed over 350 million registered users across its services, including fashion e-commerce Myntra in the country.

“Flipkart’s logistics and supply chain arm, Ekart, employs more than 100,000 people and makes deliveries to more than 90% of the addressable pin-codes in India, which, coupled with strategic warehouse infrastructure investments, is one of the group’s core strengths. Venturing into the social commerce space, Flipkart recently announced the launch of Shopsy, which will encourage local entrepreneurship,” the firm said.

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