9 Startups That Flipkart Should Look To Buyout

Flipkart raising $1Bn, Amazon announcing $2 Bn investment in its Indian arm, the huge market size of the Indian eCommerce industry has brought these big player in a war like situation where each one is trying to undercut the other.

Starting out as a simple book retailer with a Rs.4 Lakh ($6.5k) investment in 2007, Flipkart has come a long way in making it a company worth over $7 Bn. The moment of raising a billion round would have been a Eureka moment for Sachin and Binny Bansal, but the announcement of Amazon investment in Indian operations must have equally thrilled the two.

But aren’t we forgetting something? Is there only Amazon that Flipkart should be wary of? Obviously not. There are a number of players in the eCommerce segment which are operating on similar lines. After Amazon, Snapdeal is yet another player which might give a tough time to Flipkart in the coming time because of its advantage of being funded by EBay. And if we are to go by our sources, Snapdeal is soon going to raise funds for expansion as well (that was pretty well expected).

In just one year of operation, Amazon India is on track to record sales of over INR 6,000 Cr or $1 Billion in the country, where as Flipkart earlier this year had announced that it had just hit the milestone of $1 Bn gross revenues. If we talk about the products, Amazon has over 17 Mn products to be offered to the customers, which is about 2 Mn more than that of Flipkart, which currently hosts about 15 Mn products. Though Snapdeal is a little behind the two. No doubt both the online retail giants are in a neck to neck competition.

Though Flipkart is slowly and steadily moving towards becoming the number one destination for consumers in the country, the numbers above show how it is behind Amazon in terms of number of products and it’s financial war-chest. So what shall be the next plan of action for it?

Let’s talk in the Flipkart way..!

In 2007, when Flipkart was known more as a book retailer and had added just a few categories apart from Books, at that time it acquired WeRead, a social book discovery engine that enabled users to recommend and discover books, search for authors, rate and review books as well as share and network with other book lovers.

In 2011, when Flipkart had decided to enter the digital distribution domain, it acquired Mime360, a Mumbai based digital content platform for businesses.

Earlier this year, to strengthen its fashion and lifestyle segment Flipkart acquired Myntra.

With the new funding announcement, Flipkart had pointed out that it aims to become a mobile ecommerce player. With this came along rumors of Flipkart acquiring ngpay, also called as mall on mobile.

Read: The Complete Flipkart Journey from 4 Lakhs to 42,000 Cr

Acquisitions are something which can be called as the easiest and most strategic way to scale up in a niche quickly. If we look at Snapdeal, the ecommerce firm looks at acquisitions smartly and acquires firms to expand horizontally, evident from it’s previous acquisitions like Shopo.in, Doozton.com, eSportsBuy.com etc. Now it has even roped in Palaash Ventures’ Abhishek Kumar, who will be responsible for acquisitions, investments and deep partnerships that can lead to mergers for the company and he will also be looking out for all avenues of inorganic expansion for Snapdeal.

For an ecommerce firm, customer base and the products it can offer on the table is what counts. Amazon, which is on hiring spree and on an aggressive expansion mode to add more and more products to offer it’s customers is something which Flipkart must be worried about.

If Flipkart has to become India’s largest shopping destination it is important that it syndicate small startups and other vertical specific niche players to form a bigger and broader platform.

Hence it’s the need of the hour for Flipkart to acquire startups in niche single-categories so as to expand quickly. As these would be the ones who have already nailed user base of that particular category.

Here are 9 startups that we think Flipkart should acquire:

That’s Personal – Sexual Wellness

Market Size: Expected to reach around INR 2,450 Cr in 2016 and INR 8,700 Cr by 2020.

Though Flipkart just recently added the sexual wellness category, it’s going to face tough competition from the online retailers which are already dealing in this space and esp those who specifically offer these products and have a much wider variety of products to offer.

Players which specifically deal in adult products apart from That’s Personal include Shycart, IMBesharam, Kamastra.

That’s Personal can be a good deal for Flipkart because was among the early movers in this category.

DogSpot – Pet Products

Market Size: 1700 Cr. and is expected to reach INR 10,000 Cr in 2020.

This is a category which Flipkart needs to think about now as Amazon has just launched pet products under its offerings, and other ecommerce players like Snapdeal, Shopclues are already offering these products.

DogSpot can act as a good buy for Flipkart because it is yet to launch pet products on its platform and there are no direct competitors of DogSpot under this category.

HealthKart – Health Products

Market Size: Health care sector is expected to grow at a CAGR of 15% and will touch $158.2 Bn in 2017.

The huge market size for health products is completely evident that online players are trying to expand in this category aggressively, with almost each of them offering these products simply implies that competition is tough. Players like MyNutriMart are also dealing in this space.

HealthKart makes a good deal for Flipkart because it’s a hybrid firm, has offline stores, offers online health store along with a drug search marketplace.

LensKart – Eyewear

Market Size: Potentially a $10 Bn market

Flipkart is already offering products under this category from brands including Ray-Ban, Allen Solly, John Jacobs, Park Avenue, CK jeans and also offers special sunglasses for sports and outdoor activities. Lenskart competes with Jabong.com and GKBOptical.com for prescription glasses.

LensKart can be a good buy for Flipkart because apart from online presence, Lenskart is also expanding offline.

BabyOye – Baby Products

Market Size: Market size for baby, kids and maternity products is estimated at INR 40,000 Cr annually, growing at 15-20% a year.

Flipkart had launched Baby Care and Toys as a category back in 2012 and had maintained the category with a great catalogue, but to expand in this specific category there is need for Flipkart to acquire some startup. Apart from BabyOye, FirstCry is another player dealing in the same space and is backed by Temasek’s investment arm Vertex Venture Holdings, IDG Ventures and Saif Partners.

As BabyOye is backed by Accel partners and Tiger Global (common investors in Flipkart), it’ll make for a perfect deal for Flipkart.

Urbanladder – Home & Furnishing

Market Size: Home decor market is expected to touch $20 Bn by 2015.

The fragmented and unorganized Indian home decor market is rapidly becoming organized with the launch of ecommerce stores dealing specifically to address this market and even by large number of marketplaces offering these products.

The presence of various players apart from Urbanladder like Zansaar.com (Backed by Accel Partners and Tiger Global), FabFurnish, Pepperfry will make it a little difficult for Flipkart to choose from 😉

Zoffio – Office Supply

Market Size: 50,000 Cr.

The market for stationery and office supplies in India is expected to grow at a tremendous rate in the coming few years. Rocket Internet backed OfficeYes is also dealing in the same space.

Despite Zoffio launching just last yearit has managed to deliver over 45000 orders in this short span and has expanded from a 10 member team to over a 100 member team. This rapid expansion can be a driving factor for Flipkart to acquire Zoffio.

Indianroots – Ethnic Retail

Market Size: Estimated to be 7000 Cr plus

Ethnic retail is yet another category which online marketplaces should take note of. NDTV’s Indianroots launched just last year offers brands like Anouk, Bombay Dyeing, Chhabra Bros, Little India, eCraftIndia, The India Craft House and designers like Anita Dongre, Sabyasachi Mukherjee, Raw Mango, Masab, Manoviraj Khosla, Rohit Bal etc. Cbazaar, Utsav Fashions, are other players dealing in the same space.

Indianroots can be a good buy because as per our sources Snapdeal and Flipkart had recently reached out to Indianroots for an acquisition. :p

Delhivery – Logistics

Both Amazon and Flipkart are moving aggressively to improve their logistics and manage delivery efficiently. Amazon’s initiative of next-day and same day delivery forced Flipkart into launching scheduled delivery. Thus buying out a startup who is specifically dealing in this space and also dominating the market would be a great buy for Flipkart, which is handling over 5 Mn shipments a month.

There various other players in the same segment including Bluedart, FedEx, Gati, etc. but are way too big to be worth acquiring.

Delhivery has earlier acquired offline cash collection network of Gharpay for an undisclosed amount.

Apart from these Flipkart can also look to acquire startups dealing in categories like Lingerie, eLearning, and even grocery.

Also acquiring few data mining and analytics company may come handy for the etailer as processing tons of data which Flipkart might have accumulated, to make intelligent decisions, can be really a game changer in the long run.

If you too have suggestions on startups that Flipkart can acquire, do share with us below in the comments section!