Bangalore/Mumbai: Barely three months after Flipkart.com raised $200 million, the online retailer received another large fund infusion of $160 million (around 990 crore), most of it coming from new investors.

Since 2009, investors have now poured roughly $550 million into Flipkart and analysts said the latest fund-raising was a stamp of approval of Flipkart’s winner takes all strategy, with which the company aims to become the runaway leader in e-commerce.

The war chest allows Flipkart to become even more aggressive in winning over customers on the Internet and is enough for the company, at least in the near future, to take on the likes of Amazon.com Inc., which is fast increasing its presence in India, analysts said.

“I think Flipkart’s competition is really the market because with this level of funding, they really need to figure out how to grow the market more aggressively rather than focus on taking market share from competitors" said Aashish Bhinde, executive director (digital media and technology) at Avendus Capital Pvt. Ltd, a financial services firm. “Strategic players like Amazon and eBay will play out a long-term strategy within the constraints imposed on them. However, this level of capital does give Flipkart significant firepower to extend its lead to a level that makes it more challenging for Amazon and others to catch up."

The money in the latest round was put up by one of the e-commerce firm’s existing investors, Tiger Global Management Llc, as well as new investors Dragoneer Investment Group, Morgan Stanley Investment Management, Sofina and Vulcan Capital Management.

Flipkart’s other investors include Accel Partners and Iconiq Capital, and MIH (a part of South African media company Naspers Group), who along with Tiger Global had invested $200 million in the company in July.

“The rumours were true. We raised $360 million," Flipkart chief executive Sachin Bansal wrote on the social networking site Twitter, referring to media reports over the past week that the company was looking for another fund-raise. “We are excited to work with a group of investors who strongly believe in our business strategy and are completely aligned with our long-term goals. India’s e-commerce market is at a critical inflection point and this additional capital will allow us to further expand our leadership position," Bansal said in a statement.

Flipkart was in discussions to raise additional funds, and that the $200 million fund-raising deal in July included a clause for a top-up of $100-150 million, Mint reported last week.

“E-commerce with Flipkart’s strategy needs a lot of money, so it’s not surprising that they’ve raised so much. If you need to build out a logistics network, if you want next day delivery, if you want to have a wide product range in a lot of different categories, then you need this kind of money. I fully expect them to raise another $400-500 million," said Mukund Mohan, director, Microsoft Ventures, an advisor to start-ups. Mohan, however, said that considering the small size of India’s online retail market— less than $2 billion, according to some estimates—there is enough room and time for rivals such as Snapdeal.com and Jabong.com to catch up with Flipkart.

“If your strategy is different than Flipkart’s you don’t need that much money. For example, if you can identify one or two things that the customer cares about and offer them better than anyone else, you can still scale up significantly. Money is an enabler but not a differentiator," he said.

Flipkart was started in 2007 by Sachin Bansal and Binny Bansal—they are not related—as an online bookseller. Since then, it has raised at least $560 million in capital and expanded its product range to electronics, footwear, accessories and apparel.

The company has stated that it intends to become the market leader in apparel, one of the highest money earning categories where it competes with Myntra.com, Jabong and others. With massive funds at its disposal, Flipkart has bought itself the firepower to do it.

Flipkart has a target of generating $1 billion in gross merchandise value, or the total value of products sold on the site, by 2015.

“The funds we’ve raised should help us reach that goal faster as well as get us beyond that," CEO Bansal said in an interview.

“Fashion (apparel, accessories, shoes) is a strategic focus for us for the next few quarters for the company. We also think that the books category is going to be digital going forward so ebooks are also a strategic area of focus for us."

The CEO of a rival e-commerce firm said in a recent interview that Flipkart had been increasing the promotional offers and discounts on clothes and accessories over the past three-four months. “It’s going to be difficult for many firms to keep pace with them if they continue like this. At 30-50% discounts on a regular basis, it’s difficult to make any margins and you can’t keep losing money forever," said the CEO, requesting anonymity.

Flipkart changed its business model in February, moving from pure online retail to the marketplace model, in which third parties use its platform to sell products to shoppers. The marketplace model allows e-commerce companies to save on storage and other inventory-related costs as the products are held by the merchants. And the model gives firms access to FDI, which is banned in direct online retail.

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