While Flipkart had earlier announced a partnership with Alibaba-backed Paytm involving its logistics division eKart, the company has today announced partnership with another Alibaba company — UCWeb, to display its mobile site on the browser’s default homepage.
And while this obviously is an outcome of a failed app-only strategy, this could be a move to get closer to Alibaba (both partnerships are with Alibaba companies) for a potential fundraise. Alibaba has been known to be a generous investor in Indian companies. It has, until now, backed Flipkart’s rival companies Snapdeal as well as Paytm.
In the current scheme of things, and looking at Flipkart’s massive capital requirement (hopefully the final one before it pushes for an IPO), there are perhaps only three companies globally — all Chinese — who could bet in that kind of cash — Alibaba, Tencent and Baidu. And while the latter two might just shy away from entering into Indian eCommerce, the investment seems pretty apt for someone like Alibaba.
This is largely because of one sole reason — get an unassailable control over India’s rather small (as compared to China and the US) but thriving eCommerce market. Alibaba already has close to half of that — via its investments in Snapdeal and Paytm, and Flipkart is perhaps the only one standing in way. But considering how even Indian startup ecosystem’s poster boy is looking to court Alibaba for funds and Alibaba itself eyeing to launch in the Indian market, that control we are talking about, is coming — sooner or later.
Keeping the Alibaba angle aside, Flipkart is also trying to make up for the time it lost trying to pursue the vain app-only approach since last summer. The website will now become more accessible to millions of users in India who use the UC Browser. The browser is the most popular mobile web browser in the country with a commanding market share of over 52 percent.
With over 50 percent of India’s internet traffic coming from hand-held devices, ecommerce players are witnessing huge traffic through the mobile. With higher spending power, better payment options, and increased smartphone penetration, this number will only see a steady rise,
Robert Bu, general manager of UCWeb India, says in a company announcement.
Myntra, the fashion only eCommerce upstart Flipkart had acquired, too suffered the same fate for its app-only strategy. Consequently, the company had to relaunch its mobile website as it continued to loose mobile market share to rivals over its adamant app-only strategy.
Flipkart’s move comes at a time when the e-commerce company has started pursuing its potential backers to pick up a $1 Billion investment. Raising funds has become a chore for Flipkart as its valuation has gone down significantly and its profitability continues to remain under question. Moreover, departures of some of its biggest leadership names — Ankit Nagori and Mukesh Bansal — has further complicated things. In this scenario, the company obviously can’t afford to loose out on even the smallest number of customers.