Flipkart infuses $500 mn ahead of Big Billion Days

Ahead of its upcoming Big Billion Days (BBD) festive season sale, Walmart-backed e-commerce major Flipkart has infused ~34.6 billion (approx $487 million) into its India retail platform. The funding came from one of Flipkart’s subsidiaries, which is based in Singapore.

This is the first large cash infusion into Flipkart Internet after Walmart’s acquisition of 77 per cent stake. According to documents filed with the Registrar of Companies, which was sourced from Paper.vc, the investment was made by Flipkart Marketplace Private Limited.

The present fund infusion into Flipkart Internet follows a smaller investment of ~4.5 billion, the company made in its payments unit PhonePe in July. Flipkart has been making such transactions on a regular basis to recaptialise its many businesses in India.

While Walmart’s $16 billion investment in Flipkart was largely done through secondary share purchases, the US retail giant also invested $2 billion into the company as a fresh equity investment. This capital is what Flipkart is expected to burn as it expands its business and battles with rival Amazon.

In the current fiscal year, Amazon has invested ~53 billion (approx $780 million) in two tranches, into its Amazon Seller Services unit in India. The investments were done just three months apart and were seen as a sign of the company increasing its pace of burning cash to win in the country.

Both Flipkart and Amazon are expected to burn well above $1-1.5 billion in the current fiscal year as they fight for leadership in India’s fast-growing e-commerce market. Amazon, for instance, brought in $1.2 billion into its Seller Services unit in India in the last fiscal year, not counting the investments it made in the other units such as payment services, data centre business, and even its IT arm in India.

Flipkart’s nearly half a billion US dollar investment comes ahead of its BBD sale, which over the past few years has turned into a proving ground for the company. In 2016, when Flipkart’s growth had slowed in comparison to Amazon’s, the company's strong performance during BBD allowed it to retain its lead.

Even last year, Flipkart is said to have sold goods worth $1.5 billion during its five-day-long festive sale, beating rival Amazon. Analysts had estimated Flipkart’s market share to be between 55-60 per cent in terms of gross merchandise value (GMV) during BBD in 2017.

RedSeer Consulting has estimated that e-commerce sales during the upcoming festive season will be in the tune of $4 billion. Amazon and Flipkart typically control nearly 85 per cent of all e-retail in India in value terms, a trend that is maintained even during Diwali.