FlipKart has acquired ecommerce portal LetsBuy.com, MediaNama reports. Launched in July 2009, New Delhi-based LetsBuy.com had raised $6 million in venture capital funding from Helion Venture Partners, Accel Partners and Tiger Global in January 2011. Sources inform us that the deal has been finalised at $25 million.
LetsBuy.com was founded by Hitesh Dhingra (founder and CEO) and Amanpreet Bajaj (co-founder and COO). Manish Vij, the co-founder of the Vun Network, and Nitin Gupta (former country manager, South Asia at MasterCard and former president and COO at Rediff.com) have made angel investments in LetsBuy.com.
Sachin Bansal, co-founder and CEO FlipKart, said, “This acquisition fits into our strategy of building dominant shares in all categories we operate in. We are already leaders in the books and media verticals. Given that we managed to build a leadership position in consumer electronics as well since its launch in early 2011, it made sense for us to consolidate when we saw this opportunity. This acquisition opportunity came at a very attractive price for us and the timing has also been ideal. The synergies will now allow us to accelerate faster and get to a share similar to what we enjoy in the online books category”.
Hitesh Dhingra, founder and CEO, Letsbuy.com, said "Letsbuy.com has experienced a phenomenal growth in the last one year and holds a dominant position in e-commerce industry in India. The Company had a choice to raise a large round of funding as well, however aligning our business with the largest player in the market made sense as the resultant synergies will guarantee our customers the best possible service, price and selection.”
FlipKart is on an acquisition drive as in November 2011, the company had bought "assets of" Chakpak.com. It is also building an online music store and had recently acquired book recommendation engine WeRead and digital music firm Mallers, Inc.
As far this deal is concerned, it seems to be a smart move for both the companies as FlipKart has $150 million in the bank and LetsBuy has been trying to raise its second round for a while.
In our year end feature, Sachin Bansal of FlipKart said that 2012 will further define the contours of this fast growing industry and online shopping expectations will get better defined. He also hinted that larger players will emerge in this space, thus fuelling further investments and growth in the ecosystem.
The upward spiral of the ecommerce graph in India is making this space vulnerable to have more casualties. Online retailer Taggle.com had shut operations in December 2011 attributing its demise to irrational price wars. Most certainly, amongst the rest of the pack, some consolidation will happen, perhaps driven by the common VC factor.
In fact, industry watchers say ecommerce is beginning to resemble the deal sites mad rush 18 months back and online advertising network sector during its in 2008, when a number of them had started up.
At present, there are numerous ecommerce sites in the country. And almost everyone says it is only a matter of time before there is a shakeout in this increasingly crowded market. What do you think?
