The one sector where companies have grown super fast

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By June 2018, Kothari had left the building to join yet another e-commerce, Infibeam. Yet another unicorn, too. We wrote about the almost-mystical Infibeam in mid-2018; shortly after, Kothari moved to the company.

Today, Snapdeal claims to be making a full recovery. Its filings earlier this year showed a significant uptick of 84% in operating revenue.

But as we noted in our story in August this year, “contrary to the company’s claims of reducing operating losses by 70%, there is, in fact, a 32% YoY increase in like-to-like losses.”

Can’t be snapped up.

It Flipped out

For all of Snapdeal and Flipkart’s rivalry in the first half of this decade, for a close second there, Flipkart was actually considering buying Snapdeal. But it didn’t (freeing up $1 billion for other purchases).

Awkwardness aside, this would’ve been a big purchase during Flipkart’s shopping spree. The Sachin Bansal and Binny Bansal-founded company was raising funds and spending as fast as it could. We called its growing warchest a “curse of the capital” back in 2017.
And we made you wonder just what the hell was going on:

“Flipkart in talks to pick up a stake in BookMyShow”

“Flipkart eyes more acquisitions, in talks with Swiggy…

…and UrbanClap…

…and UrbanLadder…

…and Zomato”

Notice anything curious?

If you are scratching your head wondering why all the recent chatter regarding Flipkart has been about acquisitions and investments in seemingly unrelated sectors, join the club.

Between 2013 and 2015, Flipkart raised capital seven times. That’s some $3 billion just there. Its valuation grew with the money growing in the bank—Flipkart’s valuation grew 10X from $1.5 billion to $15 billion in this period.

10X.

But come 2016, Flipkart would change too much internally. We wrote about this sudden shift.

It was a company that could do no wrong. A golden unicorn that everyone wanted to touch.

And then, the ninepins started falling. Exactly a year ago, in January 2016, CEO Sachin Bansal resigned and was replaced by his fellow co-founder Binny Bansal. A month later, former Myntra CEO Mukesh Bansal, whose company Flipkart had acquired for around $300 million in May 2014, also moved on.

And two days ago, Binny himself was relieved of his CEO post by Kalyan Krishnamurthy, a nominee executive seconded by Flipkart’s bigger investor, Tiger Global.

We’d also made a little prediction about Krishnamurthy’s tenure. That he’d have to dress up the company for an IPO in 1.5 years or make a sale to a strategic buyer.
And boy oh boy, was Flipkart lucky in landing the second deal. And that too with Walmart, no less.

Mid-2018, financial newspapers were falling over themselves to write about the Walmart acquisition of Flipkart. After all, it was a whopping $20 billion deal—of which, $16 billion was all cash—with Walmart buying a majority stake of 77% in Flipkart.

Flipkart got real lucky.

Not only did it avoid an IPO situation—which could’ve gone south just as well—Flipkart, thanks to Walmart being a public company, is now one by association. In a piece we wrote around the time, we noted:

Walmart has already informed its shareholders that Flipkart’s financials will be reported as part of its international business segment.

What a win.

E-commerce is anything but easy. And Flipkart has found a way to maintain top spot. As we wrote in the story:

Flipkart’s CEO himself, recently admitted that there are only 10 million buyers who actually transact online in India every month.

Except now, all Flipkart has to worry about is how it needs to further Walmart and its own empire in India.

To do so, it’s first attacking hyperlocal delivery. Starting with grocery, but with the intention to build a hyperlocal system for anything from eggs to a smartphone.
We wrote about Flipkart’s inroads in hyperlocal in September this year.

The company is trying to crack the existing $400-500 billion Indian grocery market. The current penetration of e-commerce in grocery is just 0.5%.

Opportunity.

As we wrote in our story:

Already, the e-commerce giant has made its ambitions for its groceries arm ‘Supermart’ clear. Flipkart expects grocery to be one of its top categories in the next 3-5 years. To do this, it intends to expand the online-only Supermart stores beyond India’s major metros and into tier-II and -III cities in the coming years, says its grocery head Manish Kumar.

Flipkart started Supermart in 2017 after a short-lived hyperlocal grocery pilot in 2015. The service is now operational in five cities, primarily selling staples, packaged food, snacks and beverages.