In an interesting development, Flipkart.com - one of the leading ecommerce players in India is supposedly acquiring another leading ecommerce player Letsbuy.com. In the recent past, flipkart and letsbuy have been competing against each other heavily on common categories such as electronics and gadgets. It’s worthwhile to note that flipkart and letsbuy have common investors. Medianama reports that Flipkart might be acquiring letsbuy at a valuation of $25 – $30 million in a part cash and part stock deal. Recently flipkart raised $150 million at a valuation of $850 million. That left flipkart with lot of cash which they have been using generously to brand themselves on television and acquiring dying start-ups such as chakpak.com and letsbuy.com! From the reports and discussions around the internet, it appears like a distress sale for letsbuy.com. Earlier, letsbuy had raised $6 million at a valuation of $30 million. Letsbuy was also in advance talks with investors such as sequoia capital to raised another $40 million. But the discussions slipped through because of sky-high valuation demanded. Now, letsbuy has ran out of cash and is stranded without next round of fund infusion. This is causing them to die slowly. Since Accel and Tiger Global are common investors, this transaction does not look like a strategic buyout, but more like thrusting letsbuy into the hands of flipkart.
Also, the discussions on the internet are hyping this deal as #1 player buying out #2 player. This is far from true. Take a look at the list of top 20 ecommerce players in terms of traffic as on January 2012. Snapdeal is the #1 ecommerce player in terms of traffic followed by Amazon.com (in terms of traffic. Though they do not sell directly in India yet). Flipkart comes #3 followed by other leading players such as homeshop18, yebhi.com, myntra.com and then followed by letsbuy.com at #9. When you look at the traffic pattern, there would be overlap between the audience of flipkart and letsbuy. Discounting the overlap, the combined traffic potential now should be roughly 4.5 million uniques per month for flipkart+letsbuy. That still puts them behind snapdeal.com!
List of top 20 ecommerce players in India as on January 2012
|Position||Online Store||Approx Visitors per month||Approx Reach|
Flipkart and letsbuy transactions, revenue
Flipkart.com is clocking a turnover of 500 crore INR and letsbuy is clocking a turnover of 150 crore INR turnover. These figures represent the current state (a fact which we personally can vouch for). But when you look at the mechanics closer, Flipkart is doing roughly 30,000 transactions per day and letsbuy is doing roughly 1000 transactions per day. The average ticket size of flipkart is Rs.450 and the average ticket size of Letsbuy is Rs. 4,000. We are not sure about the margins though but we speculate that it is close to zero or may be in the red!
Letsbuy vs Flipkart performance – compiled by 91mobiles.com
|Monthly Unique Visitors||3.3 million||1.6 million|
|Daily Unique Visitors||150,000||80,000|
|Transactions / day||30,000 (from dealcurry)||1,000|
|Annual Revenue||500 crores||150 crores|
|Daily revenue||1.4 crores / day||40 lakhs / day|
|Average ticket size||Rs. 460||Rs. 4,000|
Flipkart funding history
|Series A||Accel Partners||$1 million|
|Series B||Accel Partners and Tiger Global||$10 million|
|Series C||Tiger Global Management LLC||$20 million|
|Series D||Accel Partners and Tiger Global Management||$150 million|
Letsbuy funding history
|Series A||Helion Ventures, Accel Partners and Tiger Global||$6 million|
Flipkart acquisitions till date
Accel has invested in flipkart.com, chakpak.com, myntra.com, urbantouch.com, bluestone.com, babyoye.com
Tiger Global has invested in flipkart.com, letsbuy.com, babyoye.com, exclusively.in, myntra.com, caratlane.com
Helion Ventures has invested in hoopos.com, letsbuy.com, makemytrip.com, redbus.in