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Flipkart Acquires to Increase India Market Share

Feb. 10 (Bloomberg) --, an Indian retail website, acquired to help increase share in an online market that’s expected to grow to $70 billion by the end of this decade.

Flipkart, based in Bangalore, paid in cash and equity, according to an e-mailed statement yesterday. It didn’t disclose the amount. The deal will help Flipkart, backed by Tiger Global Management LLC, expand faster and give Letsbuy access to Flipkart’s supply chain, the company said in the statement.

“This acquisition allows us to get economies of scale both on the purchase and distribution side,” Binny Bansal, chief operating officer and co-founder of Flipkart, said in a telephone interview. “We got access to e-commerce trained talent, which can help us to scale up much faster.”

Flipkart is seeking to take advantage of India’s online market that may grow to as much as $70 billion by 2020 from $550 million last year, according to retail consultant Technopak Advisors Pvt., as Internet access improves in the world’s most populous nation after China. Prime Minister Manmohan Singh’s government plans to boost broadband connections 45-fold to 600 million by 2020, according to the draft of a proposed new telecommunications policy.

Flipkart’s sales may grow 10-fold this year, Bansal said. Revenue in the year ended March 2011 was about $10 million, Vice President Ravi Vora said in November.

‘Ready Access’

Flipkart, modeled on Inc., offers books, music, computers, cameras, kitchen appliances and health-care products. sells goods such as electronics and toys.

“Consumer durables is one of the faster growing categories and is an easier one to move online,” said Saloni Nangia, senior vice president at Technopak Advisors. “Rather than spending time and effort in developing it themselves, this acquisition gives Flipkart a ready access to consumer durables, digital products and strengthens their presence in that area.”

Amazon, the world’s largest Internet retailer, started an online service in India on Feb. 3 that aggregates retail websites in the country. The move gives Amazon a foothold in the nation, while it waits for the government to ease regulations that have stalled the entry of Wal-Mart Stores Inc.

India’s government in December reversed a decision to allow 51 percent foreign ownership in stores that sell more than one brand. Overseas retailers are allowed to own stores that sell a single brand, or wholesale outlets.

To contact the reporter on this story: Malavika Sharma in New Delhi at

To contact the editor responsible for this story: Stephanie Wong at

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