Flipkart Online Services Pvt. Limited just concluded a round of funding where it was able to secure $1 billion in funding to keep the company abreast in the fight against the American giant, Amazon. According to a report by the Financial Express, the information comes through sources intimately familiar with the matter, who revealed the details on conditions of anonymity. The home grown e-commerce giant has been having a hard time due to the competition it faces from Jeff Bezos’s Amazon.
In its latest round of funding, it was shared that Flipkart managed to close at a valuation of $10 billion, which is a good figure given that the global funding market is slow at the moment. “That Flipkart will get funded was never in doubt. The valuation of $10 billion is nothing to worry about, the funding environment is rather slow globally,” said Satish Meena, Delhi-based senior forecast analyst at Forrester Research.
In the ten years of operation, Flipkart has struggled to report profits year on year due to its heavy spending on promotions and the need to offer competitive pricing to its customers. The heavy discounts offered by flipkart come out of its own pocket, causing the brand to lose money. Just for perspective, Flipkart reported a loss of Rs. 2306 Crores in the financial year that ended on March 31, 2016. This is almost double of what the losses were at the end of financial year 2015. However, this isn’t to say that the company hasn’t done well. The total revenue reported for financial year 2015 was 775 Crores while that of FY 2016 was 1952 Crores. Overall, Flipkart did see significant growth from 2015 to 2016, both in revenue and losses.
The fresh round of funding goes on to suggest that investors believe the brand has significant value to the market and as such, given enough funding can keep the competitors at bay, given that the Indian e-commerce site managed to beat Amazon during the year-end shopping rush last year.
This is great news for Flipkart as it gets the much needed resources to fight Amazon. Just to put things into perspective, Amazon was founded on July 5 1994 and didn’t report its first quarter of profits till 2002. It was only in 2004 that the e-commerce platform reported a full year of profits. The E-commerce space isn’t easy to operate in, with things getting more difficult year on year, however, the fact that Flipkart continues to secure funding for its operations, even at a time when growth has significantly slowed down globally.