Flipkart Owned by Walmart Raises $3.6 Billion, SoftBank Returns as Investor

Flipkart on Monday announced that it has raised $3.6 billion (roughly Rs. 26, 830 crores) in the latest round of funding with Softbank returning as an investor in the Bengaluru-based company. This latest round of funding was done over two separate tranches – $2.5 billion (roughly Rs. 17, 860 crores) through its existing Series G funding round, and $1.1 billion (roughly Rs. 73, 880 crores) to the newly-launched PE firm that also invested in Snapdeal and Ola.

So what’s all the fuss about this funding round? Let’s start with some history. Flipkart was founded by Sachin Bansal and Binny Bansal in 2007 and is known for being India’s first online marketplace. Over the years, Flipkart has taken huge strides and it’s now in a position to challenge the likes of Amazon, Walmart, and other big players in the country. It is today the biggest e-commerce marketplace in India and, among other things, the company has also invested in its own logistics network.

It’s also the most successful and largest-selling online marketplace in India, with revenues of more than $4 billion in 2014, making it the largest company in India’s most-profitable sector (software and IT services) by a wide margin.

The company, which has over 4,000 employees and over 1.1 million sellers, launched an employee stock purchase plan (ESOP) in December 2015 with a $900 million purchase of over 11 million shares.

Last year, it raised an additional $2 billion (roughly Rs. 150 crores) through the largest-ever funding round in India. This round, however, valued the company at over $11 billion.

The funding from Softbank (which led this round of funding) is, however, the biggest funding that Flipkart has ever received. As noted in the company’s announcement, Softbank will be a strategic investor along with some of the largest PE firms in the country.

This round of funding will help Flipkart invest in its own logistics network. In fact, the company will now allow sellers on its platform to own their own logistics network. With the help of this new fund, the company plans to invest in its own warehousing and shipping network. The company will also be able to build even more warehouses across the country.

“This round is a clear indication of the confidence that Flipkart’s leadership has in our story. By bringing together two legendary leaders, we will be able to bring real improvements in customer experience on our platform,” Sachin Bansal, Flipkart’s CEO, said.

Flipkart’s founder Sachin Bansal was at a recent panel discussion with Walmart’s CEO in New Delhi and he told him about the company’s future plans.

“We have also planned to invest in warehousing, logistics and e-commerce solutions. We are planning to buy e-commerce companies and set up an independent logistics company. We plan to invest in those assets and to use this capital to grow in multiple verticals. I think that India is where a lot of change can happen,” Sachin Bansal said.

The investment will also enable the company to expand its reach and continue to provide its sellers better and more user-friendly experiences. The company already has a network of 1,20,000 service centers in India. The company wants to extend this network in the country, and has been looking at various partnerships with various service providers.

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Rohit Bansal, Flipkart’s co-founder, also shared his thoughts. “In our view, we want to keep innovating on the platform and on that front, the last quarter has been very good,” he said.

In the past couple of months, Flipkart has revamped its product range and launched a range of products under their Big Billion Days sale. The company is also working on new initiatives. Last week, it added a new feature to the product search page that allows customers to see what a product looks like in real life.

It also introduced a smart button that allows customers to shop on the site and also pay for it, instantly. However, the company is also facing stiff competition from the likes of Amazon and Snapdeal. Last week, Amazon bought stakes in Ola and Didi Chuxing in an attempt to expand its reach. Snapdeal raised $600 million, much more than what it had previously raised, to fund its rapid expansion.