eBay Inc., a global ecommerce leader, and Flipkart, a leading Indian ecommerce company in India, have agreed to jointly pursue ecommerce opportunities in the Indian market. In exchange for an equity stake in Flipkart, eBay will make a $500 million cash investment in and sell its eBay.in business to Flipkart. Flipkart will own and operate the eBay.in business upon the close of the transaction.
eBay and Flipkart have also entered into an exclusive agreement in which they will jointly pursue cross-border trade opportunities to make eBay's global inventory accessible to more India consumers, while eBay's millions of active buyers globally will have access to more unique Indian inventory provided by Flipkart.
Sandy Shen, research director of Gartner said of the agreement, “This is good news for Flipkart as it solidifies its position as a market leader at least in the short term, keeping competition especially from Amazon at bay. It is interesting to note that this round sees the investment from strategic investors that will bring technology and market expertise that Flipkart earnestly needs, in contrast to the previous round of mostly financial investors.
Although India’s ecommerce market is still at an early stage, the market is seeing signs of consolidation as scale is a key success factor in the business. Flipkart has been and will continue to make acquisitions to increase scale, and the next challenge is to strategize the path to a sustainable business model within a set time frame. Hopefully with the funding and expertise it is getting from the investors, it will be able to establish itself as a true market leader from both the technology and operational perspectives.”
"The combination of eBay's position as a leading global ecommerce company and Flipkart's market stature will allow us to accelerate and maximize the opportunity for both companies in India," said Devin Wenig, president and CEO of eBay Inc. "eBay is committed to winning in India in partnership with Flipkart. Our exclusive global trade partnership will allow eBay and Flipkart to reach even more consumers around the world."
"This partnership between Flipkart and eBay is the coming together of two pioneering innovators who have disrupted commerce by applying technology. It bodes well for Indian and global customers, sellers and the wider ecommerce ecosystem. eBay.in has built a strong presence in India over the years and we hope to take it to greater heights as part of the Flipkart group," said Binny Bansal, group CEO, Flipkart.
The other forward looking statements made by the eBay and Flipkart reps say that upon the close of the transaction, which is expected later this year, Flipkart will acquire eBay's buyers in India. eBay will remove the number of active buyers in India from its reporting during the quarter in which the transaction closes. eBay does not expect this transaction to have a material impact on its guidance provided on January 25, 2017.