SUMMARY
According to the report, the acquisition would be in line with Flipkart’s strategy to diversify and expand into different product lines
Flipkart first entered the online travel segment in 2018 by offering MakeMyTrip’s travel services on its platform
As of today, the travel page on Flipkart’s website is powered by ixigo and allows one to book flight tickets
Ecommerce giant Flipkart is reportedly looking to purchase a controlling stake in online travel aggregator Cleartrip, a move that would pit the company against incumbents such as MakeMyTrip, Yatra, Ixigo, GoIbibo, Booking.com, EaseMyTrip and other aggregators in the travel and hospitality booking segment.
“Negotiations are on and the proposed deal is for the sale of a majority stake in Cleartrip,” a source told Moneycontrol, which first reported the development.
According to the report, the acquisition would be in line with Flipkart’s strategy to diversify and expand into different product lines and categories to drive more GMV (gross merchandise value).
Travel Biz On Recovery Track
The acquisition would come at a time when revenues for online travel startups have been steadily picking up since Covid-19 restrictions have largely been lifted in India and several other countries.
In December 2020, Ixigo cofounder Aloke Bajpai told Inc42 that the number of flyers has been increasing since July and Ixigo has seen up to 55% pre-Covid demand back in flight bookings. “If you look at trains, a major business for us, you will find that the train ticket reservation is quite close to pre-Covid levels. Currently, around 1.5 Mn people are travelling every day with reserved bookings,” Bajpai had said then.
Given that Cleartrip also offers train bookings as an official partner of the Indian Railways Catering and Tourism Corporation, Flipkart would be able to directly offer train bookings through its platform, something which it currently does not.
Flipkart first entered the online travel segment in 2018 by offering MakeMyTrip’s travel services on its platform. As of today, the travel page on Flipkart’s website is powered by ixigo and allows customers to book flight tickets and has integrations for bus and hotel bookings. Amazon too launched travel bookings in the same year as Flipkart, with its flight booking feature incidentally being powered by Cleartrip.
In FY20, Mumbai-based Cleartrip reported a 2.5% year-on-year drop in revenue at INR 318.8 Cr. The company’s operating income of INR 273.5 Cr fell by a drastic 10% in the fiscal, ahead of the lockdown which severely impacted the operations since April 2020. Cleartrip’s expenses dropped 6.8% to INR 333.2 Cr, whereas its loss was cut in half to INR 14 Cr.
Founded in 2006 by Hrush Bhatt, Matthew Spacie and Stuart Crighton, to date, Cleatrip has raised $56.4 Mn in six funding rounds from six investors.
Ecommerce Giants In Super App Race
The two major players in India’s ecommerce segment, Flipkart and Amazon, have of late, embraced the super app strategy, by assimilating a range of offerings within their parent brand, which has a strong recall value among customers.
Both platforms also launched online grocery offerings near-simultaneously in 2019 and rapidly scaled up the same amid the lockdown last year. The two companies have since entered the online pharmacy segment as well. In digital payments, while Flipkart’s parent Walmart also owns UPI market leader PhonePe, Amazon enabled UPI payments through Amazon Pay in 2019.
