After talks with Amazon fail, Flipkart courts Alibaba
Industry Trends
17-03-2016 00:00:00
After talks with Amazon fail, Flipkart courts Alibaba

If media reports to be believed, e-commerce major was in talks to buy India’s Flipkart, but the talk broke on the issue of valuation.


According to a report in The Economic Times, Amazon had engaged Flipkart in the last quarter of 2015 for a buy-out, but the talk remained inconclusive at the initial level with the irritant factor being the “low valuation”.


Amazon, said unnamed sources, offered $8 billion for Flipkart, $5 billion for Flipkart’s e-commerce business and $3 billion for the logistics business.


The talks went cold at the preliminary stage because Flipkart’s last valuation was $15.2 billion, almost double of Amazon’s offer.


Recently, a mutual fund managed by Morgan Stanley however slashed Flipkart’s valuation to somewhere close to $11 billion, down almost 27 per cent.


Meanwhile, Flipkart CEO Binny Bansal rubbished all rumours saying that his company was in the e-commerce for the long haul. He also said in a statement that the Bengaluru-based startup would raise money only at the right valuation.


The speculation over Flipkart’s talks with Amazon come at a time when funding to online retail organizations in India is in the midst of drying up. It also brings into focus, the ability of Indian Internet organizations to go all the way independently, changing the entire online retail scenario in the country.


In the meanwhile, there are reports that Flipkart has renewed talks with Alibaba recently to raise a fresh round of funding. If Alibaba acquires a stake in Flipkart, and then merges it with Paytm (in which Alibaba is the largest investor) and Snapdeal (backed by Japan’s SoftBank) in India, Amazon will find itself in a tough spot.


India’s online retailing market, which Goldman Sachs projects will expand to $69 billion in 2020 from $23 billion in 2016, has become the biggest playground for world’s largest ecommerce companies.

-K Ramanathan

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