With the Reliance Industries flagship Jio Mart backed by Facebook and Vista Equity to the tune of $8 Billion, and with Google in talks to invest a further $4 Billion, topped by another $1 Billion commitment from Amazon, this is a decisive moment for the future of Flipkart.
On Monday, 14th of July, Flipkart announced it had received $1.2 Billion in financial backing, led by its major stockholder, Walmart. The recent round of funding valued the company at $24.9 Billion, a 19% increase from when it sold the majority of stock to Walmart.
In addition to the retail behemoth, the funding round saw participation from other Flipkart shareholders, such as Tiger Global, Accel, and Tencent, in a bid to make the e-commerce group competitive with Amazon and the emerging Jio Platform.
Not a Coincidence
The timing of the commitment is anything but coincidental. This mammoth investment from the world’s largest brick and mortar retailer comes amidst a redrawing of the battle lines in the Indian E-commerce Industry. With the Reliance Industries flagship Jio Mart already backed by Facebook and Vista Equity to the tune of $8 Billion, and with Google in talks to invest a further $4 Billion, topped by another $1 Billion commitment from Amazon, this investment is crucial for the survival of Flipkart.
Given the importance of this investment, it isn’t surprising that this is the largest fundraiser for Flipkart since the majority of its stocks were bought by Walmart for $16 Billion in 2018, making it the largest foreign investment in the Indian internet Ecosystem to date.
What does the future hold for the diminishing influence of Flipkart?
While the influence of Flipkart continues to diminish in the face of two mammoth organizations like Amazon and Reliance, Flipkart remains adamant that it is seeing growth. Having surpassed the 1.5 Billion visits per month mark, and witnessing a reported 45% growth in monthly active users, topped with a 30% growth in transactions per month.
Watch: Kalyan Krishnamurthy, CEO, Flipkart talks about his business philosophy
“Today, we lead in electronics and fashion, and are rapidly accelerating share in other general merchandise categories and grocery,” the CEO of Flipkart Group, Kalyan Krishnamurthy, said, adamant that they are here for the long haul. “We will continue innovating to bring the next 200 million Indian shoppers online.”
Having invested significant money in the company, Walmart International made it clear that it intends to continue backing its subsidiary. “Flipkart continues to leverage its culture of innovation to accelerate growth and enable millions of customers, sellers, merchants and small businesses to prosper and be a part of India’s digital transformation,” Judith McKenna, President and CEO of Walmart International, announced via a press statement.
The Next Step
While there are differing perspectives over the next step for the company, which sells over 150 million products in 80 Categories, Satish Meena, senior analyst at Forrest Research is clear about the direction: “Flipkart is preparing for investment in building up grocery and creation of a competing ecosystem like Amazon and Jio.”
While a move towards a grocery marketplace does make sense, Flipkart would need significant investments from its backers to build a small business network enabled for the Internet age. What remains to be seen is how Flipkart seeks to compete with two behemoths with seemingly unlimited reserves for a market of India’s scale and particular conditions.