E-tailer Flipkart Raises $1 Billion in fresh funding

Flipkart, India’s biggest online retailer, said on Tuesday that it had received as much as $1 billion in fresh capital, illustrating its appeal to global investors and piling pressure on rivals to keep up with the company in attracting funds. The money was raised from existing investors including Tiger Global, Naspers and Government of Singapore Investment Corp., the city-state’s sovereign wealth fund.

“This is a big milestone not just for Flipkart, but for Internet firms in India in general,” chief executive officer Sachin Bansal told reporters. “We believe India can produce a $100 billion company in the next five years, and we want to be that. Whether it takes 5 or 10 years, we are here for the longer term.”

Flipkart is also scouting for acquisitions, which can help it expand into newer technologies like wearables and robotics, a move that it believes will impact mobile commerce in the days to come. "The funds will be used to make long-term strategic investments in India, especially in mobile technology," Flipkart co-founder and CEO Sachin Bansal told reporters here. 

Flipkart said it has 22 million registered users and handles 5 million shipments every month. Some months ago, Flipkart had announced that it was India’s first online retailer to hit $1 billion in gross merchandise value. “These numbers were unheard of a few years back and we are excited about the scale we have managed to achieve. But what is even more exciting is the huge opportunity that we still see before us,” the company said in a media release.

The Indian e-commerce market was worth $13 billion in 2013, with online travel accounting for over 70 percent of consumer e-commerce transactions. 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, Technopak said.

Flipkart had a 4.9 per cent market share in 2013, while Amazon and eBay had 1.6 per cent and 1.2 per cent share respectively. Flipkart, which started in 2007 as an online bookstore, sells products across categories, including fashion and electronics. It also sells white goods and furniture. While apparel and electronics are bestsellers for most e-commerce firms, categories such as home decor and household items are also popular. 

India currently has 243 million internet users but the user base is galloping as users with smart phones capable of accessing the internet proliferate rapidly. India will have over half-a-billion mobile internet users by 2020, Flipkart estimates.