Bansal: New order
Mumbai, Feb. 9: Bangalore-based Flipkart.com — the countrys biggest online retailer of books — has snapped up smaller online rival Letsbuy.com that sells computers and consumer electronics in a cash and equity deal estimated at between $20 million and $25 million.
The move signals a consolidation in the online shopping space at a time global e-commerce biggies such as Amazon.com have announced plans to enter India in conjunction with Junglee.com.
Flipkart.com and Letsbuy.com declined to divulge the size of the deal.
A statement by Flipkart co-founder and chief executive Sachin Bansal said, This acquisition fits into our strategy of building dominant shares in all categories we operate in. We are already leaders in the books and media verticals. Given that we managed to build a leadership position in consumer electronics as well since its launch in early 2011, it made sense for us to consolidate when we saw this opportunity.
Bansal said the deal was struck at an attractive price and the timing for the acquisition was ideal.
Flipkart.com recently secured a fourth round of financing of $150 million from venture capitalists who have already invested in the e-commerce site, including Accel Partners and Tiger Global Management. It is likely that some of this funding will be utilised to fund this acquisition.
Letsbuy.com has secured its position as a leading retailer of computers and consumer electronics online. It had reportedly been seeking a fresh round of funding but no announcements were made on this front.
Commenting on the decision to sell out to Flipkart.com, Letsbuy.com founder and chief executive Hitesh Dhingra said, Letsbuy.com has experienced a phenomenal growth in the past one year and holds a dominant position in the e-commerce industry.
The company had a choice to raise a large round of funding as well. However, aligning our business with the largest player in the market made sense as the resultant synergies will guarantee our customers the best possible service, price and selection.
After the buyout, Letsbuy.com with its 350 employees will operate under the current management.
Flipkart.com believes that its supply chain capabilities and superior technology performance will enhance the acquisitions business significantly.