Flipkart has reportedly raised $1 billion in the recent fundraising round. The e-commerce giant is also reportedly going to raise another billion dollars in the future. The latest funding, however, comes at a $10 billion valuation, lower than $15.5 billion in 2015, reports Bloomberg. The round that closed on Friday last week saw investments from the likes of Microsoft Corp., EBay Inc. and Tencent Holdings Ltd, the publication further report. Flipkart, however, hasn t confirmed the development yet. “As a company policy, we do not comment on market speculations, a Flipkart spokesperson told BGR India. Also Read - Windows 11: Release date, top features to expect, how to upgrade and moreAlso Read - Nintendo Direct E3 2021: Metroid Dread, Mario Party Superstars, a new Legend of Zelda and more
The latest cash flow is believed to help Flipkart take on Amazon in what is becoming a fiercely battled segment. Flipkart had a meteoric growth in its initial years, and remained unchallenged in the e-commerce segment until the US-based Amazon entered the Indian market. Over the last couple of years, Flipkart has undergone major changes, including top-level executives departure and shuffling.
Earlier this year, the company appointed Kalyan Krishnamurthy as the new CEO of Flipkart while co-founder Binny Bansal took over the position as group CEO. Krishnamurthy is a former eBay executive who also worked in Tiger Global Management, one of the top investors in Flipkart. Krishnamurthy s appointment is seen as growing influence of the investor in the company. The move came after almost one year when cofounder Sachin Bansal stepped down from the top spot. ALSO READ: Top Flipkart executives quit days after appointment of Kalyan Krishnamurthy as new CEO
2016 is considered to have been a very difficult year for Flipkart as it looked to address a range of problems including slowed revenue spike, lower valuation from investors, and cost-cutting, which allegedly led to laying off 700 employees. The company, however, had denied reports of laying off employees, stating, At times, we have employees who do not meet the performance bar. In those situations, we work closely with employees to enable them improve their performance. In due course, if these employees are unable to make the desired progress, they are encouraged to seek opportunities outside the company where their skills can be better utilized.
At the same time, Flipkart has also been grappling with mark down in valuations. US mutual fund giant Fidelity Investments reportedly reduced the valuation of its holdings in Flipkart by over a third in November. Even Morgan Stanley had wrote down the value of its holdings in Flipkart. According to reports, Fidelity valued Flipkart at roughly $5.58 billion, closer to the $5.54 billion from Morgan Stanley s.
If you look at the market, not just Flipkart, but overall e-commerce industry, is going through this phase. One of the reasons behind down-round is that some air has been taken out of the industry. It happens every three-four years, and the industry goes through a settlement phase. As far Flipkart goes, the e-commerce company has gone through a lot of changes over the years, ranging from management rejig to internal restructuring. But, it is surprising that even at that valuation Flipkart was able to raise $1 billion, Ashish Jhalani, eTailing India founder and angel investor, told BGR India. ALSO READ: Amazon bullish about India; to continue its large investments
With the latest capital under the belt, Flipkart is most likely to focus on improving customer service and retaining the existing customers while battling Amazon. One of the biggest setbacks that the Indian e-commerce companies have faced over the years is the customer service. The e-commerce companies have to focus on user experience across platforms as well as improving the customer service. If you look at Amazon, they are expanding into multiple areas, but each area they are in, they are very strong in terms of service and experience, Ashish added.