When Flipkart started the online furore, selling books, no one had thought where this company will head. The market was raw, in this part of the world, and the gold was there for digging, for early birds.
Since then, the company has come a long way, surpassing the expectations of veterans and market pundits, and raised some serious money.
It must have been a fairy tale when the company grew to where it is now, in terms of size and valuation.
At the time, there was a big market pie, which was untapped, and for a company like Flipkart – it was huge potential for a foreseeable future.
Once you tap on to something new, you can’t hide it from the world. Gradually, other companies started bidding on this new trend, as well.
Within a few years, the pie not left solely for Flipkart, but other players like Amazon, Snapdeal, and others as well.
Interestingly, ebay had operations in India long before any other big market player, we know today, had put steps here.
However, they failed to make that much of an impact or control the market share.
A decade in to existence and operations, Flipkart has now taken control of ebay’s India operations, which was unexpected, but is a smart move!
The timing couldn’t have been better!
Just last year, there was so much going on with the company (Flipkart), in terms of losing valuation, reshuffle at the top layer, and constant fight to remain market leader; with Amazon keeping them on their toes.
Why Do It At All?
If you are aware of the subject: Mergers and Acquisitions, then you would be able to relate this move.
- Synergy: Since both the organisations were operating in the same field, with different associations with vendors and different strategies, this move would give them a platform to mix the best of both.
- Growth or Bigger Market Share: Without having to make those transactions, efforts from sales team, or any other resource utilisation, they’ll get a bigger market share to operate in; both vendors and customers.
- Increase Supply-Chain: The workforce could be combined to restructure the supply-chain mechanism and deliver the products in much organised fashion. Thus, improve the customer satisfaction and increase the customer retention/loyalty.
- Eliminate Competition: With one less enemy to look out for, the competition just got smaller. However, the increased forces would be enough to fend off challenges, or perhaps, go on the offensive for a while.
ebay, was not going to be profitable anyways, as we have seen for so many years. For them, hooking on to a better ship should look like a saviour in sight.
However, with another merger (Flipkart-Snapdeal) doing the rounds, the future holds ontogenesis or decay, it is to be seen!
How do you make money? Spinoffs, split-ups, liquidations, mergers and acquisitions. ~ Mario Gabelli
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