BENGALURU: A fortnight after raising $700 million, Flipkart
has drawn up an ambitious strategy for the year ahead, including snagging the next round of funding
at a valuation of $15 billion (Rs 95,000 crore) and selling goods worth $5 billion by March 2016.
India's largest online retailer, which raised nearly $2 billion last year alone, will also begin discussions about a US listing while scouting to buy technology-focussed startups, three people aware of the company's plans told ET. "An IPO is imminent, but a call is likely to be taken only towards the end of the year," said one of the sources. Flipkart is now valued at $11.25 billion and expects to sell goods worth $3 billion by the end of the financial year in March 2015.
With Amazon set to compete aggressively with an investment of $2 billion in India and Snapdeal raising nearly $1 billion from Japan's SoftBank
and others, Flipkart believes it has a real fight on its hands when it comes retaining its leadership in the online retail market.
Online retailer needs to experiment, say experts
The market is projected by Nomura to be worth $23 billion by 2019. The India unit of the Seattlebased online retailer is fast becoming a dominant player: The company, with eight warehouses, now boasts of 18,000 registered sellers and ships goods to over 17,000 pin codes in the country. It's done this in little less than 18 months since starting operations in the country.
Flipkart, with 4,000 sellers, has close to 13 warehouses and ships goods to 300 cities. Flipkart did not reply to an email seeking its views. Also on the cards in the coming days is a bigger profile for Mukesh Bansal, the CEO of fashion portal Myntra
, which was acquired by Flipkart last year. Bansal, who also oversees the electronics retail business as well as marketing, is being perceived by investors as possessing the temperament and skills to help Flipkart scale up rapidly and innovatively.
This, said two sources, is part of a larger organisational overhaul. "What they (Flipkart) need to focus on now is building an installed base of loyal users who will find the platform sticky enough and not go to competitors like Snapdeal or Amazon at the drop of a hat," said Anindya Ghose, professor of IT and marketing at New York University's Leonard Stern School of Business
"They also need to ensure that snafus like the ones that happened during the Big Billion Day sale last year don't ever happen again," he said, referring to a hyped-up discount bonanza that left many customers angry because of technical glitches. Sachin Bansal, the founder and CEO, ended up apologising to customers after one of the mostanticipated sale days by the company.
Some observers believe that Flipkart is a potential acquisition target, with the company making more strategic sense for Walmart
than Amazon. Flipkart, founded in 2007 by Sachin Bansal
and chief operating officer Binny Bansal
(they are not related), employs more than 20,000 staff and began life as a retailer of books. Experts are of the view that if Flipkart wants to sustain its leadership, it should not be scared of experimenting.
"Agreed, many of their offerings like Flyte (music downloading service) did not do well and it had to shut down. But one thing you cannot take away from them (Flipkart) is their ability to experiment, learn and keep on evolving," said Vineesh Chadha, former chief operating officer of ColorPlus Fashions, and managing partner at Aumentis Consulting. "For this reason, the Indian ecommerce story is for real and the valuation Flipkart is seeking is justified."
Source: The Economic Times