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Flipkart, India’s largest e-commerce marketplace, recently closed a $1 billion funding round, and has plans to raise an additional $1 billion in the coming months, according to Bloomberg.
The funding round brings Flipkart’s valuation to about $10 billion. Investors in the round included Microsoft, Ebay, and Tencent.
Flipkart needs the capital to maintain its market share as deep-pocketed e-commerce giants like Amazon and Alibaba-backed Paytm push further into the region.
- Amazon has been intently focused on growing in India, with plans to invest $5 billion in its operations there over the next few years. Amazon also began offering its Prime services in India early last year and surpassed Flipkart’s gross merchandise value in July 2016.
- Paytm closed a $200 million round of funding to expand its e-commerce operations in India, which it has been aggressively growing over the past few years.
Flipkart will use the funding to offer promotions and discounts as it battles against Amazon and Paytm. For example, the company offers discounts to customers ordering items together that can be shipped in one box. In addition, Flipkart recently cut the commission it charges sellers and reduced its return policy for top-selling goods from 30 days to 10 in order to to reduce costs to vendors — moves aimed at keeping sellers from shifting to its competitors’ sites. As Amazon and Paytm close in on Flipkart, it will be costly for the company to outmaneuver these giants. Funding will be critical to retaining Flipkart’s merchants via incentives, while attracting buyers through discounts and promotions.
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