Flipkart, the poster child of Indian eCommerce, has acquired LetsBuy for $25 mn. This is a sign of things to come for eCommerce in India as lot of startups are looking for a payday. If 2011 was the year of starting up eCommercing sites selling anything from pots to shoes, 2012 would be an year of reflection and consolidation.
The news is broke by Medianama yesterday night. Mainstream media doesn’t have it yet and also the news and other details are yet to be confirmed.
Not Billion dollars. Not yet
Flipkart has recently risen $150 mn funding valuing the company at $850. With the acquisition of LetsBuy the valuation is now close to $900. Not quite the billion dollars everybody wants it to be.
LetsBuy has occupied the Indian mind space for quite some time. It’s the second site I go to check for prices on the latest gadgets or books. I thought it was a competitor and everybody seems to agree. The pageviews, one of the measures used to guage online companies, are quite good too. But that doesn’t explain the $25 mn valuation of LetsBuy.
Was LetsBuy valued artificially low as it has common investors with Flipkart? Or LetsBuy never really was a competitor to Flipkart, rather a nice little dot which is rising fast?
Amazon effect
Flipkart is one company which seems to be taking its competition very seriously. When the first news of Amazon contemplating an India entry broke out last year, Flipkart went into frenzy and added new products to its line-up. With Amazon’s pseudo entry through Junglee.com, Flipkart has upped the ante and bought itself a gift.
With Flipkart’s move, Amazon now has some serious thinking to do. Its marketplace Junglee.com was thought to be a killer move. I am yet to be convinced. With the new combination of Flipkart and Letsbuy, Amazon will have to look out for other players if it wants to play ball.
It’s all in the family
The deal isn’t much of Flipkart’s or LetsBuy’s dynamism. The credit goes to the common investors (Tiger Global and Accel Partners) both the companies have. The investors sure have vision.
It’s time to look for all the eCommerce companies, their investors and find synergies. What’s next?
Source: Asian Correspondent
The valuation may not v.low on net revenue terms (GMV less share to merchants). Also read there is a stock based compensation too – that can give more upside.