It’s turning into quite a year for Flipkart. Today the e-commerce company from India has confirmed the much-reported rumor that it has raised $1 billion in fresh investment, as it eyes new verticals, expand its operations and stave off challenges from Amazon and eBay.
The round reportedly An announcement confirms that the round includes participation from existing investors Tiger Global, Yuri Milner’s DST Global group, Accel Partners, ICONIQ Capital, Morgan Stanley Investment Management and Sofina. Prior to today’s news, Flipkart had taken just over $700 million from investors.
The company most recently raised $210 million back in May, just after it acquired fashion-focused rival Myntra for an undisclosed fee which was said to be around $300 million. Since then, we have seen Flipkart launch its own line of tablets and smartphones, in addition to an Amazon Prime-like members service that provides a host of benefits for 500 INR, around US$8.50, per year.
Why all the investor interest in e-commerce in India?
The increase in capital is about giving the company a footprint to succeed in India’s e-commerce market that has vast potential as internet penetration and the rate of smartphone ownership increases. A report from Accel Partners earlier this year predicts that the number of online shoppers will double to 40 million by 2016, with their spending set to increase four-fold to $8.5 million.
Speaking to Quartz, Kunal Bahl, the CEO of Flipkart’s closest rival Snapdeal, predicted that the value of the online shopping market in India could reach $50 billion by 2020. That’s a whole lot of potential.
“We believe the internet will improve the quality of life for millions of Indians, and e-commerce is going to play a huge role in this change. The focus at Flipkart is to continue to make shopping online simpler and more accessible through the use of technology,” said Flipkart founders Sachin Bansal and Binny Bansal in a statement.
Flipkart claims 18 million registered users and 3.5 million visits to its site per day, and it claims to be the first e-commerce firm outside of the US to reach $1 billion in GMV (sales on its marketplace). Yet, it has two US giants breathing down its neck. Amazon quietly moved into the India market last June. It began selling books only, but now offers music, movies, electronics, fashion and other categories that Flipkart covers too.
eBay also has plans for the Indian market, after it invested in Snapdeal with a view to a future acquisition. Snapdeal itself recently raised $100 million from five investors as well, including Singapore’s Temasek Holdings.
Image via Sankarshan Mukhopadhyay / Flickr