Ecommerce market leader Flipkart is entering the refurbished goods market, estimated to be worth $15 billion in India, with a new yet-to-be-launched platform. This marks the shutdown of the India arm of Ebay, which Flipkart bought last year.
US-based pre-owned goods marketplace Ebay had invested over $500 million for a stake in Flipkart, and had sold its India business to the latter in mid-2017.
Flipkart CEO Kalyan Krishnamurthy, in an email to employees, said, “Based on our learnings at eBay.in, we have built a brand new value platform launching with refurbished goods — a large market which is predominantly unorganised. With Flipkart’s customer base and F1 Info Solutions & Services in our group portfolio, I believe that we can solve the key barriers to refurbished — trust and convenience — at scale. Our endeavour will be to ensure that all the eBay.in sellers and customers migrate to the new platform over time with a remarkably enhanced experience.”
Point to note: Of a dozen acquisitions by Flipkart, Ebay is not the first to get the axe. WeRead, a social book discovery platform which Flipkart acquired in 2010, was shut down in a few months, as was Bollywood content portal Chakpak bought in 2011.
Not that Flipkart is the only ecommerce player to not exploit its acquisitions. Its earlier rival Snapdeal had acquired Shopo, an online marketplace for designer handicraft products, in 2013. Although Shopo was transformed into a C2C ecommerce platform, it was shut in early 2017. The same happened to Exclusively.in, which shut down within 18 months after Snapdeal acquired it.
No doubt, consumer internet startups have to be more careful in their acquisitions. Flipkart’s investment in online home rental startup NestAway had raised some eyebrows as the latter has nothing in common with the ecommerce titan. However, Flipkart co-founder and Group CEO Binny Bansal recently said Flipkart will not invest as much in companies now.
“There was a time when we had more cash than we needed. So we were investing in some non-strategic areas. But I have learnt that startups should use cash for furthering strategic interests and making a differentiation - if they give you exclusivity or some business upside, which you won’t get otherwise (without investing). The capital you raise is not for investing because you are not in the investment business. The only investments we will do from now on are strategic in nature,” he had said.
Ebay’s shut down and Flipkart launching a new platform seem corollary to this plan.
Ebay was launched in India in 2005, two years before Flipkart’s arrival, a year after it acquired Baazee.com for about $50 million. But it was never able to capitalise on this first-mover advantage, while Flipkart, Snapdeal, ShopClues, and Amazon were all able to race ahead of the company.
Last year, post-merger, Flipkart and eBay signed an exclusive cross-border trade agreement so that their customers can access the inventory of each other’s sellers.
In May this year, just hours after the Walmart-Flipkart deal was announced, US-based ecommerce major eBay said it had notified Flipkart and Walmart about its intention to sell its holdings in the former, which would give it gross proceeds of approximately $1.1 billion.
In a statement, eBay had said it would end its current strategic relationship with Flipkart, which includes terminating Flipkart’s license to use the eBay.in brand.
“We plan to relaunch eBay India with a differentiated offer to focus initially on the cross-border trade opportunity, which we believe is significant. We believe there is huge growth potential for ecommerce in India, and significant opportunity for multiple players to succeed in India’s diverse, domestic market,” the company had said.
It now looks like Flipkart had different plans. In September 2017, it had acquired F1 Info Solutions, a mobiles and IT repair services company with a pan-India presence of owned and franchised centres. It is now a part of Flipkart’s other acquisition, Jeeves, a service provider for home appliances and furniture.
Flipkart’s plan is to now make use of these arms to expand its offerings to the entire lifecycle of mobiles, IT products and consumer electronics, from sales to after sales to repair services.
The use of refurbished goods – especially smartphones and consumer durables – is rising in the country. Besides biggies like Quikr and OLX, startups like Rocking Deals, Reboot, Yaantra and GoZunk are also vying to make the best of the refurbished goods’ market.
A year ago, Gurgaon-based ecommerce marketplace ShopClues- which targets customers from Tier III towns – had launched refurbished and unboxed electronic devices, including laptops, smartphones, and tablets. According to this report, Shopclues sold 5,780 refurbished phones in 2018, which is 35 percent higher than the average of 2017.