As Amazon looms, Flipkart and Snapdeal strike $400 million in deals

MUMBAI Thu May 22, 2014 5:09am IST

A parcel moves on the conveyor belt at Amazon's logistics centre in Graben near Augsburg December 16, 2013. REUTERS/Michaela Rehle/Files

A parcel moves on the conveyor belt at Amazon's logistics centre in Graben near Augsburg December 16, 2013.

Credit: Reuters/Michaela Rehle/Files

Related Topics

Stocks

   

MUMBAI (Reuters) - With Amazon.com Inc (AMZN.O) ramping up its presence in India, two local online retailers are preparing for tougher competition with separate deals worth a combined $400 million set to be finalised this week.

Flipkart, India's largest online retailer, is expected on Thursday to announce its acquisition of a majority stake in online fashion retailer Myntra in a deal worth about $300 million, said an official from Myntra who did not want to be named as he was not authorised to speak with the media.

In a separate deal, local online retailer Snapdeal has raised $100 million from five investors, a company official said on Wednesday. The deal will be announced in a few days, he said.

The Snapdeal investors include Temasek Holdings, an official with the Singapore state investor said.

The two deals come after Amazon, the world's biggest online retailer, last year slashed prices and rolled-out next-day delivery in a bid to win market share in India's fast-growing e-commerce industry.

"Amazon is scaling up .... much faster than expected and that is forcing everyone from retailers to investors in these companies to re-think," said Ashish Jhalani, founder of e-tailing India, a retail consultancy.

"The sentiment here at the moment is about survival, it's about now or never," he said.

Bangalore-based Flipkart, set up by two ex-Amazon employees in 2007, has sought to grow its presence in the online fashion segment, a category where Myntra is the market leader.

Tiger Global Management and Accel Partners are investors in both Flipkart and Myntra.

Flipkart and Myntra declined to comment.

Snapdeal, an online marketplace that facilitates transactions between third party suppliers and customers, is set to complete its second round of funding this year by raising $100 million, the company official said.

The official declined to be named and did not provide details. Snapdeal Chief Executive Officer Kunal Bahl was not immediately available for comment.

The Economic Times newspaper, citing an unnamed source, reported on Tuesday that other investors in Snapdeal included BlackRock Inc (BLK.N) and Hong Kong-based Myriad Asset Management. Myriad declined to comment and BlackRock did not respond to a request for comment.

The Indian e-commerce market was worth $13 billion in 2013, according to a joint report by KPMG and the Internet and Mobile Association of India, with online travel accounting for over 70 percent of consumer e-commerce transactions last year.

Online sales of retail goods totaled $1.6 billion in 2013, according to research firm Forrester, and are expected to reach $76 billion by 2021, according to consultancy Technopak.

By comparison, China's business to consumer e-commerce sales may surpass $180 billion this year, with industry leader Alibaba IPO-ALIB.N readying an initial public offering (IPO) worth more than $15 billion.

(Additional reporting by Saeed Azhar in SINGAPORE and Nishant Kumar in HONG KONG; Editing by Sumeet Chatterjee, Tony Munroe and Mark Potter)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Public Health

REUTERS SHOWCASE

Airtel Profit Jumps

Airtel Profit Jumps

Bharti Q2 net profit more than doubles   Full Article 

Maruti Earnings

Maruti Earnings

Maruti Suzuki net profit up 29 percent, beats estimates.  Full Article 

ICICI Results

ICICI Results

ICICI Bank Q2 profit up 15 percent, beats estimates.  Full Article 

Cost Cutting

Cost Cutting

PM Narendra Modi boots officials out of the first class cabin  Full Article 

Market at Record

Market at Record

Sensex, Nifty hit record highs; reforms outpace hawkish Fed.  Full Article 

Moody's on India

Moody's on India

Moody's welcomes India's policy steps, but wants to see more.  Full Article 

End Of QE

End Of QE

U.S. Fed ends bond buying, exhibits confidence in U.S. recovery.  Full Article 

Samsung Results

Samsung Results

Smartphone woes drag Samsung Elec Q3 profit to more than 3-year low.  Full Article 

Refining Margins

Refining Margins

BPCL aims to double refining margins with refinery expansion.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage