Amazon, SoftBank Battle for One of Last Untapped Internet Markets

Amazon, SoftBank Battle for One of Last Untapped Internet Markets

Amazon, SoftBank Battle for One of Last Untapped Internet Markets

The fundraising pegs the value of Flipkart perhaps at an estimated $11.6 billion, the same as it was in April during the previous round, a source said. Homegrown ecommerce marketplace Flipkart has raised an investment from Vision Fund of Japanese conglomerate SoftBank, despite the fallout of Snapdeal merger. Between them, Flipkart and Snapdeal account for more than 50% of the Indian online shopping market, though Amazon India is a growing rival. In May this year, SoftBank pumped in $1.4 billion (over Rs 9,079 crore) in Indian digital payments platform, Paytm. "SoftBank's proven track record of partnering with transformative technology leaders has earned it the reputation of being a visionary investor", the co-founders said in the statement.

Experts tracking the sector believe that apart from a push to increase its dominance in the fashion category through infusion into group company Myntra, Flipkart will also increase its investment in building strong private labels with an eye on improving gross margins. Citi served as financial advisor and AZB & Partners served as legal advisor to the SoftBank Vision Fund. "We look forward to the results of the Snapdeal 2.0 strategy and to remain invested in the vibrant Indian e-commerce space", he said in a statement last month.

Over the past year, analysts in the market were feeling that Flipkart had run out of steam due to lack of funds from its investors. We want to support innovative companies because they are best positioned to leverage technology. "As the pioneers in Indian e-commerce, Flipkart is doing that every day", said Masayoshi Son, chairman and CEO of SoftBank Group Corp. "It is recognition of India's unparalleled potential to become a leader in technology and e-commerce on a massive scale".

According to investors and experts in the e-commerce ecosystem, the funding by Softbank in Flipkart paves way for a bigger consolidation and that India will not see a monopoly in the e-commerce market unlike China and the US. Flipkart now has a lot more cash to splash.

Softbank's investment fund, which is now one of Flipkart's biggest shareholders, is also backed by the government of Saudi Arabia, Apple, Qualcomm, and manufacturing heavyweight Foxconn, among others. In January 2017, it was reported that SoftBank Capital, will facilitate its investments in India via its $100 Bn tech focussed fund, Vision Fund.

This was especially significant as Flipkart is competing against the cash-rich Amazon.

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