How the mighty have fallen
In the recent times, valuation figures of Flipkart have come back down to earth after years of implausible valuations. Based on a regulatory filing as of February 2016 with the US Securities and Exchange Commission (SEC), the two mutual fund investors have marked down Flipkart to:
- Valic Co 1 marked down the online marketplace’s value by 29.4%. Value of per share has dropped down from $139 in August 2015 to $98 in February 2016
- Fidelity Rutland Square Trust II marked down the online marketplace’s value by 39.6%. Value of per share has dropped down from 135.8 in August 2015 to $82 in February 2016
Ecommerce investors turn wary
With the growing number of internet and smartphone users, the online shopping industry continues to grow. However, investors have turned wary, result of which is the growing list of digital start-up markdowns. Few of them are Jabong, Snapdeal, eBay, Uber, Dropbox, Quikr and Airbnb.
Can top brands rescue Flipkart?
The ecommerce biggie is turning to established brands to meet their business goals. Because investors will start pouring funds again only if the etailer achieves its revenue target.
Flipkart has reached out to big electronic & clothing brands and offered to set-up exclusive ‘Brand Stores’ on its platform. The idea is to use data & analytics to enable brands target customers effectively and increase their sales.
Speaking about this new initiative, Surojit Chatterjee, senior VP- Product Management at Flipkart said,
“The response till now has been encouraging. It’s a way for brands to reach out in a very personalised manner while customers can discover their favourite brands, including new launches.”
The feature was launched in April on the company’s app and it will be soon introduced on its desktop site. Bosch, HP, @Home, Puma, Peter England, Samsung, Vu Technologies, and Wildcraft are few of the brands that are onboard.
Flipkart is trying hard to cut down their losses. Right from filing legal cases to collect advertising dues from companies to reducing burn rate for profitability, the etailer is looking for ways to come out of the markdown crisis. Will the marketplace succeed? Or other investors too will join the markdown bandwagon?