From modest start to $16-billion deal

New Delhi, May 9 

From selling books online to striking a jaw-dropping $16- billion deal with the world’s largest retailer Walmart, all within 11 years, Flipkart has given India its big startup success story — the one which is likely to be quoted by starry-eyed entrepreneurs for years to come.

Former employees of US e-commerce giant Amazon, Sachin Bansal and Binny Bansal had met in 2005 at IIT-Delhi. Flipkart was launched in October 2007.

The idea was simple. Consumers could shop online and get books delivered to their doorstep. Flipkart registered 20 shipments in the year of its debut.

It wasn’t an easy road as internet penetration was abysmally low and e-commerce, unheard of. Bricks and mortar retailers were not threatened and many dismissed e-tailing as a foreign concept saying that Indians want to ‘touch and feel’ whatever they buy.

Today, Indian e-commerce industry is already close to $30 billion in size and analysts expect this to zoom to $200 billion by 2026.

The growth of the sector was comfortably in sync with the meteoric rise of Flipkart.

From a modest two-bedroom apartment in Koramangala, the Bengaluru-headquarted company now has multiple offices across the country. A bulk of its operations are run out of a plush campus in the city that is spread over 1 lakh sq ft and houses 6,800 employees.

It was almost two years after starting business that Flipkart got its first full-time employee in Ambur Iyyappa, who went on to become a millionaire, thanks to the ESOPs. The headcount was rapidly scaled to 150 that year.

In October same year, Accel Partners came on board as an investor and pumped in $1 million. A few months later, US hedge fund Tiger Global bought into the vision and Flipkart received a funding of $10 million.

A number of funding rounds later, Flipkart raised $1.4 billion from Tencent, eBay and Microsoft, followed by $2.5 billion investment by SoftBank Vision Fund last year.

The year 2010 was an important one for Flipkart with the company shipping among other things, electronics and mobile phones. This category now makes up for a significant portion of the sales for the online platform.

It was also the year when Flipkart pioneered ‘Cash on Delivery’ in India, which changed the course of online retail in the country as consumers now paid for items only after receiving them, adding a layer of comfort to online shopping. Flipkart launched its logistics unit, eKart to smoothen deliveries.

In 2016, Flipkart achieved the milestone of 100 million registered customers and saw Sachin and Binny earning a spot among TIME magazine’s list of 100 most-influential people.

The company made its first acquisition with WeRead and since then, it has acquired a number of companies including Letsbuy, FX Mart, fashion e-tail player Myntra and UPI-based payments startup PhonePe. It also bought majority stake in companies like Jeeves and ngpay.

At the beginning of last year, Kalyan Krishnamurthy was named as the new CEO, moving Binny Bansal to the role of Group CEO. Reports suggested that Tiger Global wanted better control of the organisation and hence, the decision.

Bansals’ e-commerce bet finally has paid off big time and set the 2018 M&A counters ringing with US retailer Walmart buying about 77% stake in Flipkart for $16 billion. — PTI 

Major M&A deals in recent times 

• Vodafone & Idea Cellular in 2017 decided to merge their India operations in a $23-billion deal. The merger is yet to be completed
• Rosneft, the Netherlands-based Trafigura Group Pte, and Russian investment fund United Capital Partners acquired Essar Oil for $12.9 billion in August 2017
• $9.73-billion merger between Analjit Singh-promoted Max Financial Services Ltd and mortgage lender HDFC created the largest private-sector life insurer in the country in 2016
• UltraTech acquired cement business of Jaiprakash Associates for $2.4 billion in 2016
• Nirma acquired Lafarge India for $1.4 billion in 2016 
• Vedanta acquired 58.5% in Cairn India for a total consideration of $8.67 billion in 2011
• BP Plc bought 30% stake in 23 oil and gas blocks of Reliance Industries for $7.2 billion in 2011
• Japanese drug maker Daiichi Sankyo paid up to $4.6 billion for control of Ranbaxy Laboratories Ltd in 2008

Flipkart’s 11-year journey

• Former employees of US e-commerce giant Amazon, Sachin Bansal and Binny Bansal had met in 2005 at IIT-Delhi
• Flipkart was born in October 2007
• The company registered 20 shipments in the year of its debut
• In October the same year, Accel Partners came on board as an investor and pumped in $1 million
• A few months later, US hedge fund Tiger Global bought into the vision and Flipkart received a funding of $10 million
• A number of funding rounds later, Flipkart raised $1.4 billion from Tencent, eBay and Microsoft, followed by $2.5 billion investment by SoftBank Vision Fund in 2017

Traders oppose, industry gives thumbs up 

Walmart’s acquisition of homegrown online retailer Flipkart for $16 billion on Wednesday faced opposition from traders and an RSS affiliate, though industry body Assocham said it was a 'salute' to the success of Indian startups. While industry leader Kiran Mazumdar-Shaw saw the deal as a "huge endorsement for India's first e-tailing" company, Future Group CEO Kishore Biyani termed it as "just an event of change of ownership" and everything else in the market remained the same. The Confederation of All India Traders (CAIT) said the deal is nothing but a clear attempt to control and dominate the retail trade in India by Walmart through e-commerce in the long run. RSS-affiliate Swadeshi Jagran Manch alleged that Walmart was "circumventing" rules for a "back-door entry" into India and sought Prime Minister Narendra Modi's intervention to safeguard "national interest". "This will further eliminate small and medium businesses, small shops, and opportunity to create more jobs. Most of these small entrepreneurs are already battling for their existence; entry of Walmart will further create problems for them," the co-convenor of the manch said in a letter to the PM. TNS/ PTI