Flipkart history and valuation over the years

why walmart invested in flipkart, flipkarts valuation and history

1. FLIPKART INTRODUCTION
Back in 2007, when Flipkart was launched, Indian e-commerce industry was
taking its beginner steps. The company is registered in Singapore, but theyir
headquarters are in the city of Bangalore, India.

Sachin Bansal and Binny Bansal, who were working for Amazon.com had an idea
to start an e-commerce company in India. Both of them are alumni of IIT, Delhi
and are native of Chandigarh, India. They left their jobs in Amazon to start their
own business.
Flipkart began selling books to begin with. It soon expanded and began offering a
wide variety of goods
FLIPKART'S 10 YEAR JOURNEY
2007: small beginnings
Sachin Bansal and Binny Bansal, who originally met in 2005 at IIT-Delhi, launch an
internet business called Flipkart on September 15, 2007. Working as an online
bookstore, the platform promises to deliver books anywhere across India, and soon has
its first customer, a young engineer from Mahbubnagar (in current-day
Telangana). Despite difficulties, Sachin and Binny pull off the delivery and manage to
close the year with 20 successful shipments. Flipkart is officially in business.
2008: exponential growth
Flipkart explodes onto the e-commerce scene, with word-of-mouth publicity driving the
platform’s popularity sharply upwards. The company opens its first office in
Bengaluru’s Koramangala, pin code 560034. With rapidly growing interest in Flipkart,
Sachin and Binny launch 24x7 customer service to deal with the platform’s growing
consumer base. Flipkart closes the year with over 3,400 shipments successfully
delivered.
2009: a year of firsts
2009 is a year full of firsts for two-year-old Flipkart. Sachin and Binny hire their first
full-time employee, AmburIyyappa, who would eventually go on to become a
millionaire. The company’s meteoric growth attracts the attention of venture capital,
and Accel Partners becomes the first VC firm to invest in Flipkart, with an investment of

2. $1 million. Fuelled by this growth and funding, Flipkart expands its presence in India,
opening offices in Delhi and Mumbai, and within the year, the company’s headcount
grows to 150. Flipkart also crosses an important milestone by opening pre-orders for the
first time. The chosen book? Dan Brown’s The Lost Symbol.
2010: COD, Ekart make a splash
Recognising the prevalence of cash in the Indian consumer’s life, Flipkart pioneers
a Cash-on-Delivery payment option, letting consumers pay for their orders in cash
upon doorstep receipt of their ordered goods. The company launches Ekart, a logistics
arm led by fresher VinothPoovalingam, to handle the logistical requirements of the new
payment option and the growing demand for goods. Flipkart also introduces a 30-day
return policy and expands its product categories to include Music, Movies, Games,
Electronics, and Mobiles. 2010 also sees Flipkart make one of its first acquisitions, in
social book recommendation portal WeRead.
2011: a truly pan-Indian delivery network
Flipkart’s steady growth continues, with shopping categories expanding to
include Cameras, Computers, Laptops, Large Appliances, Health, Personal Care, and
Stationery. The platform launches its own digital wallet, as well as a 30-day
replacement policy, and acquires Bollywood content portal Chakpak’s digital
catalogue and Mumbai-based music streaming and digital content platform Mime360.
By the end of the year, Flipkart’s network has expanded to deliveries in over 600 cities
across India.
2012: going mobile
Flipkart goes mobile in a big way, with the launch of its own native mobile shopping
app. The platform also receives PCI DSS Certification, allowing it to store card details
for consumers securely on the platform, and giving users the ‘Saved Cards’ feature
when checking out. Flipkart’s expansion continues at a steady pace with the acquisition
of online electronics retailer Letsbuy, the launch of Fashion, Perfumes, Watches,
Menswear, Toys, Posters, and Baby Care categories, and the debut of two new services
– DigiFlip, a private label for electronics, and Flyte MP3, a service for online music sales.

3. 2013: welcome to the third-party marketplace
Flipkart decides to expand its service offerings, adopting a marketplace model to bring
third-party sellers onto the platform. The decision sees an immediate positive response
from the market, and sales rapidly climb – Flipkart manages to sell 100,000 books in a
single day. To allay consumer concerns, the platform introduces Next Day Shipping
Guarantee and also launches PayZippy, an online payments solution for merchants and
customers. In a bid to go global, Flipkart begins accepting international cards for
transactions. A new Woman’s Lifestyle category is introduced, and the company
raises $360 million across two separatefunding rounds.
2014: Big Billion Day is here!
2014 is a big year financially for Flipkart, with the acquisition of online fashion
retailer Myntra and majority stakes in after-sales service provider Jeeves and payments
platform Ngpay. The company raises $$1.9 billion across three separate rounds and
ends the year with a valuation of $11 billion, also becoming the first Indian Internet
retail firm to register Gross Merchandise Value (GMV) of $1.9 billion. There is a slew of
fresh service launches across the year, including Flipkart First, In-a-Day Guarantee,
Scheduled Delivery, and Same Day Delivery Guarantee. The platform’s first exclusive
associations come into play – with Motorola and Xiaomi – and the company launches a
huge online sale in October – the Big Billion Day. The Big Billion Day would go on to
become one of Flipkart’s most popular offerings.
2015: brand refresh
2015 is mostly business as usual for Flipkart, with several new launches, acquisitions,
and fundraising rounds. Over the course of the year, the platform launches Home and
Maternity product categories, the Ad Platform and Strategic Brands Group in a
corporate rejig, and the data-light mobile website Flipkart Lite. Acquisitions over the
year include mobile advertising company AdIquity, mobile marketing firm AppIterate,
and payment services startup FX Mart, as well as an investment in delivery locker
service startup Qikpod. Midway through the year, Flipkart launches a brand refresh
with a new logo and improved progressive policies for employees, including maternity,
paternity and adoption leave policies.
2016: milestones, corporate reshuffle, and more

4. The year starts with Binny Bansal taking over as CEO of Flipkart from Sachin Bansal,
who becomes the firm’s Executive Chairman. A few months later, TIMEmagazine
names the two Co-founders among their 100 most-influential people in the world.
Flipkart celebrates two big milestones – the first Indian mobile app to cross 50 million
users and crossing 100 million registered customers. No Cost EMIand Flipkart Assured,
two key new services, make their debut, and the platform also acquires and relaunches
PhonePe, India’s first UPI (Unified Payments Interface) based app which was started by
three former Flipkart employees.
2017: reaching new heights and breaking glass ceilings
Flipkart breaks tradition by appointing its first-ever non-founding CEO, Kalyan
Krishnamurthy, while Binny Bansal takes over as Group CEO. PhonePe, launched the
previous year, sees rapid adoption thanks to the demonetisation movement, and crosses
10 million downloads on the Google Play Store. Flipkart raises $1.4 billion from
Tencent, eBay, and Microsoft, and acquires eBay India in exchange for equity – eBay
continues to function as an independent entity. In August 2017, SoftBank’s Vision
Fund invests $1.5 billion in Flipkart to become one of its largest shareholders.

MERGER & ACQUISITIONS

Established by Mukesh Bansal along with Ashutosh Lawania and Vineet Saxena, also
abinash mallick Myntra sold on-demand personalized gift items. It mainly operated on
the B2B (business-to-business) model during its initial years. Between 2007 and 2010,
the site allowed customers to personalize products such as T-shirts, mugs, mouse pads,
and others.
[10]

In 2011, Myntra began selling fashion and lifestyle products and moved away from
personalisation. By 2012 Myntra offered products from 350 Indian and International
brands. The website launched the brands Fastrack Watches and Being Human.
[11]

In 2014 Myntra was acquired by Flipkart in a deal valued at ₹2,000
crore (US$290 million). The purchase was influenced by two large common
shareholders, Tiger Global and Accel Partners.
[9]
Myntra functions and operates

5. independently.
[12]
Myntra continues to operate as a standalone brand under Flipkart
ownership, focusing primarily on "fashion-conscious" consumers.
[13]

In 2014, Myntra's portfolio included about 1,50,000 products of over 1000 brands, with a
distribution area of around 9000 pincodes in India.
[14]


Marking the biggest consolidation in the e-commerce space in India, homegrown e-
retailer Flipkart has acquired online fashion retailer Myntra in an estimated Rs 2,000
crore deal.
The move WAS DONE to help Flipkart strengthen its apparel portfolio and compete
more aggressively with peers like Amazon and Snapdeal.
The industry, estimated to be worth about USD 3 billion currently, has firms such as
Snapdeal, and Amazon which follow the marketplace model.
Led by increasing Internet penetration and youngsters shopping online, Flipkart’s
annualised sales crossed USD 1 billion (over Rs 6,100 crore) a year ahead of target. It
had estimated to reach the billion dollar mark for gross merchandise value by 2015.


VALUATION FIGURES

The valuation of a business is the process of determining the current worth of a
business, using objective measures, and evaluating all aspects of the business. A
business valuation might include an analysis of the company's management, its capital
structure, its future earnings prospects or the market value of its assets. The tools used
for valuation can vary among valuators, businesses and industries

2014: Following the acquisition of Myntra in that year, Flipkart raised $210 million from
DST Global. The valuation then stood at $2.6 billion.
2014: This was a piece of history as Flipkart witnessed a whopping $1B funding round
from GIC Singapore and existing backers like Naspers, DST Global and Tiger Global.
Even the valuation shot up 1.5 times and stood at $7 billion, within the span of less than
quarter of a year.
2014: Flipkart raised a $700 million fund from hedge funds like Greenoaks, Steadview
Capital, sovereign wealth fund Qatar Investment Authority, mutual fund T Rowe Price.
Flipkart’s valuation again increased to more than $11 billion.

6. 2015: Flipkart reached the highest valuation at $15.5 billion. It also raised $700 million
from all the existing investors.
2016: This was a bad year for Flipkart. The company received the first big markdown by
a Morgan Stanley Mutual Fund. This time the valuation stood at $11billion.
2016: The markdowns kept continuing by various mutual fund investors like Vanguard,
T Rowe Price and Fidelity.
2016: This time Valic, the US fund, marked up the valuation of its shares in Flipkart by
10 percent. Now, the valuation of the company was $11.5 billion.
2016: A Morgan Stanley Mutual Fund made another considerable cut to the value of its
Flipkart shares. The valuation was now a mere, $5.6 billion.
2017 - The investment by eBay is accompanied by a strategic commercial agreement
with Flipkart. In exchange for an equity stake in Flipkart, eBay is making a cash
investment in and selling its eBay.in business to Flipkart. eBay.in will continue to
operate as an independent entity as a part of Flipkart.
2018 - WALMART BUYS FLIPKART

WALMARTS REASONS FOR INVESTMENT IN FLIPKART
Cash burn
The first and foremost concern of any investee company is ROI. While investing in
startups is a high risk business, Flipkart is a unicorn and has a stabilised market share in
the online retail market.
Flipkart is a 10-yearold company and is yet to make profit. Flipkart Ltd reported a 68
percent jump in losses to Rs 8,771 crore for the year ended March 2017 from the
previous year. Though revenue at Flipkart group rose by 29 percent to Rs 19,854 crore.
While Walmart will definitely expect Flipkart to be profitable in the long term, its ROI
will be hugely based on the value of the company, at least in the medium term to
provide it a window to exit either during an IPO or before that.

7. Flipkart Ltd has lost what’s equivalent to half of the $6.1 billion it has raised from
investors since inception a decade ago. And the accumulated losses of the company
stood at about Rs 24,000 crore ($3.6 billion) as of March 2017, according to its filings in
Singapore. That has widened from nearly Rs 10,000 crore a year ago.
So it’s logical to expect Walmart to be burning the midnight oil now in the US and find
a proper valuation, than burning cash in India in its fight against Amazon.
Flipkart’s penetration in the fashion market
If valuation is all about future cash flow, then a word on Flipkart’s plan for fashion
vertical can’t be missed. Fashion is one of the leading verticals in the Flipkart group,
with one out of every unit sold on it.
After achieving over $1 billion in gross merchandise value (GMV) in its fashion
business in FY2018, e-tailer Flipkart is looking to double its average annual purchase
value over the next five years. Flipkart is looking to achieve an average annual purchase
value of $60 by 2023, up from the current $30.
“We have garnered 35 per cent market share. We are looking to achieve 3x growth by
2020 and gain 50 per cent market share of online fashion by 2023,” says Rishi Vasudev,
Head of Flipkart Fashion.
Rishi, said, “Fashion online is a dominant sales category with 34 million shoppers
online in India This is expected to rise to 100 million in the next five years. Currently
about 70 percent of all fashion shoppers shop on Flipkart, and we will have a base of
around 75 million in the next five years. Tier 2 & tier 3 cities are adding to the customer
base where Flipkart Fashion is witnessing a growth rate of 70 percent.”. He added that
the market is large with huge potential to grow hence Flipkart Fashion is at the
forefront, driving growth.
Flipkart’s penetration in the electronics market
Fashion and electronics are the two largest drivers for Flipkart. One of the company’s
strategies is to dominate the Indian ecommerce market is to expand its smartphone

8. sales. Winning the smartphone battle has a spin-off effect of making the smartphone
customer a regular customer.
Flipkart’s initial target, is to take 40 percent of all smartphone sales in the country by
2020, from the current 25 percent, Ajay Yadav, Flipkart’s vice president for mobiles and
large appliances, said recently.
Talking about the large appliances and television segments, Flipkart recently reported,
“We are on track to hit the Rs 5,000 crore GMV mark in television this year. We are
targeting Rs 9,000 crore in large appliances overall.”
Tax and regulatory issues
The government rules allows 100 percent foreign direct investment (FDI) in online retail
of goods and services under the so-called “marketplace model” through the automatic
route. But it also prohibits marketplaces from offering discounts and capping total sales
originating from a group company or any one vendor at 25 percent.
But there are still allegations that these marketplaces are flouting FDI rules and creating
an unequal playing field. Recently the handset makers’ lobby Indian Cellular
Association (ICA) urged the Commerce Minister Suresh Prabhu to take action against
Amazon and Flipkart, alleging that the ecommerce platforms were violating foreign
direct investment (FDI) rules by offering discounts - directly or indirectly - on mobile
phones and other products through intermediaries or partner companies.
Heeding to their request, the Ministry of Commerce & Industry has asked the RBI and
the ED to look into the allegations.
The war on discounts doesn’t stop here. Reports of Flipkart having an issue with the
Income tax department came to light recently. The Bengaluru I-T office had asked
Flipkart to reclassify marketing expenditure as capital expenditure. Flipkart has
appealed against the Rs 110 crore tax demand for the financial year 2015-16 following
the tax department’s order to reclassify marketing expenses and discounts as capital
expenditure.

9. With a section of sellers continuously blaming the marketplace for its alleged unfair
trading practices and the online marketplaces’ history of run-ins with offline retailers,
the issue of a level playing field will always be under the close scanner of Competition
Commission of India (CCI).
Assets
A marketplace is an asset light model. But Flipkart has its own companies that are
sellers in the platform. The other assets are land, building, people, and intangibles.
Flipkart has around 7,600 employees, including those in functions like warehouse, and
logistics. About 6,800 employees have now shifted and are working in the new Flipkart
campus in Bengaluru, spread over 8.3 lakh sq ft, with a seating capacity of over 7,300
people. It is not clear whether the new facility is a leased or an acquired property. The
company also has plans to acquire a 100-acre plot on the outskirts of Bengaluru to set
up a logistics park spread over 4.5 million square feet.
There are multiple other factors that will directly or indirectly affect the final valuation.
Flipkart’s potential growth in other verticals including the digital payment arm,
PhonePe is in direct competition with Alibaba and Softbank backed Paytm.
Funding and backing PhonePe to the fullest would lead Walmart to a new three-way
fight between Walmart-Amazon-Alibaba in India.