22 February 2012

Why Flipkart Acquired LetsBuy?

I think flipkart and letsbuy are two possible acquisitions for amazon.com in India, Flipkart was more closer with market reach,nearness to the amazon in India than letsbuy but with high valuation and series of funding from the VCs, though is far from realising profit yet did not get through the acquisition.

Obvious alternative for Amazon Acquisition would have been LetsBuy, with its simple alternative with some what less market penetration, but with open source backed cms, and little funding from the VCs beyond family funds.

For e-commerce of the scale of either letsbuy or flipkart to survive against new entrant(Junglee/Amazon) need more synergy and collaboration than before and letsbuy adds that to flipkart. This makes Junglee stick to its initial price comparision model, unarmed by the competition because of the lack of operational experience in the new demography.

I don't doubt Amazon's ability to start afresh but that would not be as easy as it would have been if they could acquire a company already doing that.

Now Why Flipkart acquired letsbuy, is not just a simple answer to say acquire new vertical/bring some thing to board etc., though they are part of the package. This move is more towards disarming the competition.

And I am surprised by the agility of this entire process once they realised new (ar)rival.


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