I find Flipkart's valuation very puzzling clearly the investors have seen what I haven't. Flipkart's revenue is extremely less for a population of the size of India. They makes ~$200M in revenues per year with an operational loss which I am told is significant.<p>Flipkart has managed to scale its revenue but without making a profit. Even this would have appeared as a good opportunity if Flipkart was kind of de-facto e-commerce business in India. Turns out that it is not. Snapdeal, Junglee (Amazon India) are pretty close. Myntra was the leader in apparel and fashion products sale online which was then acquired by Flipkart. (Myntra was not profitable either).<p>I find it hard to understand why anyone believes that Flipkart would ever make profit in next 5 years or so. I find it hard to believe.<p>Unlike USA, India has not yet figured out how to build proper usable roads, the cities are not planned and India does not have a proper addressing system. Government regulations have further made life difficult for courier companies. All this has resulted into cities and towns where traveling over few kms is very expensive and time consuming as a result small shops catering to need of local communities have sprung up like mushrooms. Current India is probably resembles more to the A&P days of USA.<p>My assertion is validated by the fact that Travel Booking and Movie ticket booking websites in India are growing fast and also very profitable.
For the uninitiated: Flipkart is AMZN of India. They are doing tonnes of sales here. FK is getting so much valuation as India does not have a big enough organised retail (roughly 5%). This means there is a generation which would move on from unorganized retail to online. And hence the astronomical valuations. FK also has some unique ideas. For instance, they launched Moto e, g and x in India as exclusive sellers. They managed to sell 1 million of those phones in last 6 months. This alone would have easily resulted in a $20-25 million rev.
The best part about Flipkart are<p>1. They made online selling popular in India<p>2. Products got delivered in door steps<p>3. I could buy books at 20%-50% discount and foreign edition textbooks easily. This is something we couldnt even dream about, in some parts of India<p>4. I could easily get products from lee, nike, puma,... at discounted price too. If you are not in a big city, then its difficult to get branded products and if you get then you need to worry about whether they are original or not<p>I bought close to 150 books from Flipkart, which would cost some 70$ more if I buy from local sellers.<p>I have my Toshiba Laptop, Moto G phone, Lee Shirt, Sennheiser Headphone, Reebok shoe all bought from online sellers :)
Flipkart recently moved away from the Amazon warehousing model to an online marketplace model and I've heard nothing but complaints from customers regarding the switch. Even their own presence in the marketplace is unable to keep up the quality of service as it scales, and all kinds of scammy retailers have set up shop now which has made it relatively more dangerous to purchase on their service now.<p>Time will tell if they pay that billion back.
I see 3 reasons.<p>I.
Flipkart is losing money definitely. But so is Amazon which has not reported a profit before last year. However Flipkart's losses are not for the same reasons as Amazon but it should not be forgotten that FK is never afraid to try out models and kill them if they fail. FK is following a lot of Amazon's footsteps but it is coming into its own quite a bit and given FK does not have to do the same mistakes that Amazon had to do for more than a decade, FK has a good second mover advantage.<p>II.
Flipkart has been a trailblazer in the Indian e-commerce space by forcing the users to internalize new habits. Getting them to trust the online e-commerce stores with their money and buying products online without a rethink, Cash on delivery and now 'online only sales'.<p>Amazon.in is also being forced to innovate at its own pace in India changing its last mile delivery models (IBP stores).<p>So right now this is anyone's game.<p>III.
Flipkart is simply bulking up its warchest on the impending war with Amazon. Neither of them are going to let go of the massive opportunity that they do not have any more in China. If Alibaba could do a single day $5.7 Bn sales on Nov 11, there is no reason to think why we might not be looking at a similar opportunity just as big in India where the human consumption potential is just as big!<p>However, the more it looks like India will not be a winner takes all market. Amazon, Snapdeal and Flipkart will have to contend with being 3 players in a huge ecommerce market in India unlike China or US... the rules are just hatke in India :) Of course there are still the pristine south east Asian markets for everybody's taking!
Wow. Is this real? Does anyone know anything about this company? Wikipedia has the company's revenue at 200m USD as of January, making an operational loss. They don't sell internationally.<p>Is there some important part to this story that we're missing? Seems like there must be something worth knowing about here.<p>On a slightly unrelated note, it's amazing that billions can be raised pre-IPO these days. It almost buries IPOs as a fund raising methods.I realize exit/liquidity was/is the bigger reason for tech IPOs already, but it seems somehow unnatural to completely abandon the role of financing. Not sure where I'm going with this.
I like that the Indian start up scene is getting serious now. Entrepreneurs are brave enough to compete with the big players unlike a few years ago when most start ups were basically simple web apps or a tech consultancy kind of thing. As an Indian this gives me hope that a soon the brain drain will stop and a lot of talented Indians abroad (with connections and some money to invest) will come back to India to either start up or work for one.
Best of luck to both founders, and this is great news for the Indian startup industry, but I am confused by this statement:<p>“We are not thinking about [an IPO]. We have not settled on a business model that we can take public,”<p>Shouldn't the business model be validated by your Series A or max B? Flipkart has taken multiple rounds in the past, and this one looks as large as a Series C.<p>Edit: Firms involved also sound like series C firms - Tiger Global, DST etc.
And immediately after this, Amazon invests $2B in India.<p><a href="http://www.amazon.in/gp/feature.html/ref=amb_link_182486107_1?ie=UTF8&docId=1000818573&pf_rd_m=A1VBAL9TL5WCBF&pf_rd_s=center-2&pf_rd_r=0MW8ZXJW9DHVBDWC8HRN&pf_rd_t=101&pf_rd_p=516940287&pf_rd_i=1592137031" rel="nofollow">http://www.amazon.in/gp/feature.html/ref=amb_link_182486107_...</a>
After my family started buying dresses online (average $20 per item), I started paying more attention. Online shopping in India not only provides a vast range across vendors, it also saves the cost and hassle of travelling to a big store - especially for singleton purchases. When discerning dress buyers are happy to buy online that must signal some kind of shift.
Some computer parts like hardisk's are cheaper on flipkart than the purchase price of an authorized retailer.
So when a customer comes to a shop, the dealer says that stock will come in 2 days and he promptly places an order on flipkart.
Huh. Never heard of the company, but what surprised me is that the site is actually really fast and snappy, somehow, for me -- especially considering what I saw when I took a look at the source code.
this is big. Indian people believes Flipkart how Americans believe Amazon. Flipkart delivery products quickly with replacement guarantee. This is enough for them to raise the funds.