Now, if this news is true, it may probably be a game-changer for fast growing Indian E-Commerce space. Last night, Medianama reported that Flipkart will soon be announcing acquisition of Letsbuy.com. Although, there is no official word or confirmation on this acquisition, the news has a good chance of being true.
Flipkart recently closed USD 150 million dollar funding, and are currently flush with funds to make such acquisitions. However, I am a little surprised that they have gone after similar multi-brand space acquisition in which they themselves are in.
Flipkart.com is clearly the leader currently in multi-brand online retail space, while Infibeam, Letsbuy, Homeshop18 and Indiaplaza all have very similar traffic from India as you can see from the Alexa traffic ranking given below.
Although, Amazon’s entry in India should not be much of worry to Flipkart in its current form, this acquisition points to one fact that they want to be far ahead in the game by the Amazon make a full fledged entry with their own multi-brand retail products.
Medianama also points that Letsbuy’s valuation is roughly in USD 20 to 25 million region and is expected to be part cash, part equity deal.
We will update when we get some more details of this deal!
Update 5:00pm, 9th Feb 2012: Following is the official Press Release sent to us:
Flipkart Acquires Letsbuy
Consolidates leadership in online Consumer Electronics space
Bangalore. February 9, 2012: Flipkart.com, India’s largest e-commerce player in physical products has acquired Letsbuy, the second largest retailer in electronics. With this move, Flipkart has firmly established itself as the leader in the consumer electronic space. This deal will also allow for a faster rate of expansion for both companies – giving the combined entity a much larger share in the consumer electronics market.
The acquisition is a combination of cash and equity. The founders of Letsbuy along with their 350+ team will continue to function independently, with the added advantage of now being able to access Flipkart’s superior technology platform and supply chain capabilities.
Speaking about the acquisition, Flipkart’s co-founder and CEO Sachin Bansal said, “This acquisition fits into our strategy of building dominant shares in all categories we operate in. We are already leaders in the books and media verticals. Given that we managed to build a leadership position in consumer electronics as well since its launch in early 2011, it made sense for us to consolidate when we saw this opportunity. This acquisition opportunity came at a very attractive price for us and the timing has also been ideal. The synergies will now allow us to accelerate faster and get to a share similar to what we enjoy in the online books category”.
Letsbuy.com founder & CEO Hitesh Dhingra said "Letsbuy.com has experienced a phenomenal growth in the last one year and holds a dominant position in e-commerce industry in India. We believe that our expertise in 3Cs* category matched with Flipkart’s superior technology and supply chain could be a killer combination. The Company had a choice to raise a large round of funding as well, however aligning our business with the largest player in the market made sense as the resultant synergies will guarantee our customers the best possible service, price and selection. ”
While the finer details on mutual synergies are being worked out by both teams at present, the move has been welcomed by investors of both firms. Helion, the lead investor in Letsbuy.com has said it believes that the combined strength of the two leading players is formidable and will be able to deliver a stronger value proposition to customers.