eBay Invests Big Money in India, Goes Into Head-on Battle With Amazon

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The Indian online marketplace is much like its global counterpart. Online stores are doing billions of dollars of business and are growing fast at the expense of traditional stores. The Indian online market is already worth several billions of dollars. The busiest Indian e-commerce websites are Flipkart, Snapdeal, and Myntra. However, Amazon (NASDAQ:AMZN) India has been growing rapidly and is fast becoming a big player.

eBay Invests in Flipkart to Fight the Growth of Amazon

If Amazon (NASDAQ:AMZN) is competing, can eBay (NASDAQ:EBAY) be far behind! eBay has just decided to get into the Indian space by investing $500 million into the Indian market leader Flipkart, which is valued at $11.6 billion. A few months back, the company was valued even higher at $15.2 billion. Their current annual sales are a little over $4 billion.

Bengaluru-based Flipkart has raised a total of $1.4 billion in their latest round of fundraisers, with eBay being one of the major investors. Others that have decided to invest in the company include Microsoft and Tencent of China. Interestingly, eBay already has a small presence in India. It has now been decided that Flipkart will be buying the India operations of eBay.

Sachin and Binny Bansal, the founders of Flipkart said, “This is a landmark deal for Flipkart and for India as it endorses our tech prowess, our innovative mindset and the potential we have to disrupt traditional markets”.

Flipkart has also been acquiring businesses, including two prominent rivals Jabong and Myntra. According to rumors, they may make a bid soon for rival Snapdeal. If Flipkart buys Snapdeal, then there will be just two big players in India – Flipkart backed by eBay and Amazon.

Flipkart Trying to Fight the Growth of Amazon

Amazon has been growing rapidly over the last couple of years, making the Indian e-commerce players worried. Flipkart has a lot to lose as they are currently the market leaders. Flipkart has raised a total of $4.6 billion, with this latest cash inflow, and this will finally let them match the $5 billion capital commitment of Amazon for India.

Kalyan Krishnamurthy, the new CEO of Flipkart, will also have a more solid position in the business after this. He took over as the CEO in January. The $1.4 billion capital infusion will also help them negotiate better with SoftBank, which is the largest investor in Snapdeal. Currently, Flipkart is having talks with SoftBank for an investment of $1-1.5 billion.