While its parent Walmart consolidated its wholesale operations in India by merging the business with Flipkart, the e-tailer led significant investments in startups such as hyperlocal shipping expert — ShadowFax and fresh produce supply chain company — Ninjakart.
Walmart-owned e-tailer Flipkart is set to obtain online travel aggregator Cleartrip in a distress deal with the deal likely to be announced during the next few days. Aside from eyeing the controlling stake in Cleartrip, Bengaluru-headquartered Flipkart, that owns trend e-tailer — Myntra , has been busy recently, picking up an 8{c27255e51a72bad2a6cb30fe58330144c0418fbd7e8dd39587873a85d63c5975} stake in Aditya Birla Fashion & Retail for Rs 1,500 crore and investing Rs 260 crore in Arvind Youth Brands, an arm of denim giant Arvind, that gave it rights to popular apparel brands such as Flying Machine.
Mumbai-headquartered Cleartrip, founded by Stuart Crighton, Hrush Bhatt, and Matthew Spacie in 2006, has been severely impacted by travel restrictions caused by this Covid-19 pandemic.
The acquisition of its nearest rival Goibibo by Nasdaq-listed Makemytrip further dimmed its prospects in a field where margins in airline reservations are paper thin.
Flipkart, which is fighting a close battle with US e-tail giant Amazon for one-upmanship in India’s booming e-commerce marketplace, will use Cleartrip to market and expand into other product categories, such as online bookings of hotels and flights, to boost its overall gross merchandise value (GMV).
The development comes close on the heels of Flipkart partnering with Ahmedabad-based Adani Group, led by tycoon Gautam Adani, to develop among India’s largest logistics hubs and data centres.
Cleartrip, which earns more than 80{c27255e51a72bad2a6cb30fe58330144c0418fbd7e8dd39587873a85d63c5975} of its revenue from airline bookings, reported a 2.5{c27255e51a72bad2a6cb30fe58330144c0418fbd7e8dd39587873a85d63c5975} drop in earnings in FY20, while Goibibo zoomed forward in the same period with an 11{c27255e51a72bad2a6cb30fe58330144c0418fbd7e8dd39587873a85d63c5975} increase at Rs 1,595 crore, which is nearly five times that of Cleartrip’s.
Industry experts termed the alliance as a strategic move that will help Flipkart march against not only Amazon but Jiomart, too. Cleartrip counts DAG Ventures, Gund Investment Corporation, and Concur Technologies as its key investors and has last raised funds in 2016. A questionnaire emailed to a Flipkart Group spokesperson did not elicit a response.