In times when shopping is slow and travelling at a standstill, Flipkart made a surprise strategic move by betting on the struggling travel tech startup Cleartrip.
- Flipkart is reported to have paid $40 million or ₹299.8 crores in cash and equity for Cleartrip.
- As per Flipkart’s statement, Cleartrip will work as an independent identity and all of its workforces is ensured a smooth transition.
- The acquisition will also allow Flipkart to strengthen its presence in the online travel sector and become a stronger competitor against Amazon.
- However, analysts see this as a ‘Distress Sale’, since the travel and hospitality sector in general, and Cleartrip in particular, faced huge losses and pandemic-inflicted pain.
The Walmart-owned e-commerce giant Flipkart touched revenue of ₹346 billion last year. Firing on all cylinders, Flipkart has been on an aggressive acquisition spree backed by America’s biggest supermarket chain and its wealthy owners, the Walton family.
The addition of Cleartrip to Flipkart’s basket will inject some much-needed resources and energy into the travel tech industry, which otherwise, has been in shambles due to pandemic. On the other hand, the Cleartrip team with its deep industry knowledge and technology capabilities will help Flipkart provide deeper value and travel experiences for its customer base.
Disruptive move or Distress Sale?
Cleartrip’s forte has been to simplify the user experience and amplify the reach. Their technology is the capitalizing factor in Flipkart’s move. With a product-driven focus, Cleartrip could use the fresh injection of cash to become the preferred travel partner of choice in a wide range of markets, as and when consumers are allowed travel full flow. However, many analysts see this as a ‘Distress Sale’, since Cleartrip, and most of the travel and hospitality sector, has faced huge losses and pandemic-inflicted pain.
According to Tofler, Cleartrip reported a loss of ₹14 crore in 2020, a 53 percent decrease compared to the previous financial year. Even before the pandemic was declared last year, Cleartrip faced tough competition as Naspers merged with MakeMyTrip and its portfolio firm GoIbibo in 2016. Naspers then sold its stake in the company to China-based Ctrip and exited the challenging market. Cleartrip also came under pressure with other players like EaseMyTrip, Booking.com and Yatra entering the space.
Impact of Flipkart’s Cleartrip acquisition across Sectors
Founded in 2006 by Hrush Bhatt, Matthew Spacie and Stuart Crighton as an air travel and hotel booking aggregator, Cleartrip has been gradually losing its grip in the sector, never mind the pandemic. However, with Flipkart’s backing, Cleartrip can look forward to gaining lost ground. Likewise, Cleartrip’s bosses can also be relieved that the firm is likely to withstand the turbulent, cost-intensive and draining “pandemic times” for the travel tech sector.
From Flipkart’s point of view, the acquisition of Cleartrip further strengthens its stronghold in the Indian e-commerce sector. Founded in 2007 by Sachin Bansal and Binny Bansal in Bangalore, the thirteen-year-old company already lists Myntra, PhonePe, eBay, Ekart, Jeeves, and Jabong and Flipkart Wholesale among its subsidiaries. In 2020, Flipkart emerged as the seventh most valuable brand in India. The rapid ascent has seen Flipkart quash inhibitions of becoming a hinge to Walmart and become a formidable entity in itself.You will find more infographics at Statista
As for the travel and tech sector, this means that the Walmart-backed Flipkart means business. Earlier, Flipkart partnered with MakeMyTrip, in a coming together of two of the largest consumer internet companies in India. In 2018, the two entered a strategic partnership that sought to offer travel services on Flipkart’s platform.