Along with raising $1.4 billion funding from Microsoft, eBay and Tencent, Flipkart — the largest homegrown e-commerce marketplace also announced the acquisition of eBay India. eBay is now looking to close this sale in the early second half of this year.
With this sale, the company is hoping that its $500-million investment and strategic partnership with Flipkart will boost its business in one of the fastest growing market. Commenting about this, Devin Wenig, CEO at eBay, said:
I’m very excited about this new exclusive partnership, which enables us to increase our penetration in India by making eBay’s global inventory accessible to a significantly larger set of Indian consumers. We’re committed to winning in India through this partnership.
Once the sale closes, eBay will stop reporting active sales in the country and related financial details. Scott Schenkel, CFO at eBay, said,
We expect this deal to close early in the second half of 2017, and upon deal close we will no longer report active buyer GMV and related financials for eBay India. We do not expect the GMV or financial impact to be material to our overall 2017 results. However, we do expect to remove approximately 4 million buyers from our active buyer reporting.
Devin Wenig further added that eBay’s active buyers will have access to more unique Indian inventory provided by Flipkart, and on the other hand, Flipkart customers will have access to eBay’s global inventory.
Earlier this month, Flipkart was finally able to raise funding. It raised a whooping $1.4 billion from eBay along with Microsoft and Tencent, in the biggest funding round in the Indian ecommerce space. The deal also included sale of eBay.in to Flipkart and an exclusive cross-border trade agreement.
eBay had entered the Indian market in the year 2004 and started operations through the acquisition of News Corp-backed Bazee.com. It had also picked up a significant stake in Delhi-based online retailer Snapdeal in 2013, a part of which it still holds.
However, this is the first time that eBay is exiting a market. In the year 2002, eBay was forced to exit Japan after losing market share to Yahoo in the country. It then had to exit China in 2006 after investing $250 million, and sold its entire business to Tom Online.
Although eBay had the early mover advantage in the Indian market, it lost the plot in Indian e-tail long ago. The major reason being that it neither had the promptness of Flipkart, nor the customer focus of Amazon. Also, the company didn’t believe in the speed of product delivery to customers.