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Ahead of festive showdown, Flipkart pumps in Rs 3,463 crore to boost sales

This is the first capital infusion by the Walmart-backed e-commerce giant ever since the US-based retail behemoth acquired a majority stake in the company.

twitter-logoBusinessToday.In | September 19, 2018 | Updated 15:08 IST
Ahead of festive showdown, Flipkart pumps in Rs 3,463 crore to boost sales

Flipkart is aiming at achieving 50 per cent of all smartphone sales during the upcoming festive month. Keeping the ambitious plan in mind, Flipkart has pumped in Rs 3,463 crore into its online marketplace, Flipkart Internet. This is the biggest capital infusion by the Walmart-backed e-commerce giant ever since the US-based retail behemoth acquired a majority stake in the company.

The season has become a showdown of sorts between top e-commerce companies competing with each other to garner maximum sales. The season brings in heavy discounts and deals, boosting the sales numbers and the overall position of these companies.

The fund infusion was done in two tranches, which will help Flipkart compete fiercely with arch-rival Amazon India for the top spot. "In accordance with the Letter of Offer dated 14 August, 2018 circulated by the company for the rights issue of shares, the board of directors of the company be and hereby allot 14,57,598 Class A equity shares...for an amount aggregating to Rs 30,07,02,46,740 for cash to Flipkart Marketplace Private Ltd, Singapore," regulatory documents filed with Corporate Affairs Ministry said.

The company board has okayed the fund infusion proposal on August 30, in addition to allotting 2.21 lakh equity shares for Rs 455.95 crore for cash to Flipkart Marketplace, Singapore. Analysts expect the competition between Amazon India and Flipkart to be even fiercer this season as both these companies have pumped in billions of rupees to improve their product offerings and logistic capabilities to ensure better customer services.

Amazon has infused $1 billion into Amazon Seller Services so far, including Rs 2,700 crore investment in August. Flipkart, which signed $16 billion deal with Walmart earlier this year, is making its position stronger by the day. Singapore-based Flipkart Marketplace invested Rs 370 crore in Flipkart in January alone. It has also invested heavily in its logistic arm eKart and online payments company PhonePe. Since 2016, Flipkart's total investment in these two companies is more than Rs 3,260 crore.

Flipkart also plans to invest around $264 million in its Bengaluru-based grocery vertical Supermart. It's Flipkart's second entry in the grocery segment after a failed attempt with Nearby. It now aims to take on Amazon, Big Basket, Grofers, Local Bania, etc, by launching an extensively separate supply chain, bringing in its own label, and giving everyday discounts. The company is planning to bring in everything - from fresh staple to meals to beverages and packaged food -- people need to run a household.

About 20 million people are expected to shop on various e-commerce platforms during the festive sale next month, translating into sales of around $3 billion for players like Amazon and Flipkart, according to a report by research firm RedSeer.  As part of its $16 billion acquisition plan, Walmart will make a fresh investment of around $2 billion in Flipkart.

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