Flipkart To Buy LetsBuy.com: A Marriage Of Convenience?

LetsBuy.com launched in July 2009 and had a venture capital inflow from firms like Helion Venture Partners, Accel Partners and Tiger Global. Flipkart has been on an acquiring spree for quite a while now. Just recently, they acquired Mime360 and the Bollywood content assets from Chakpak.com. We are hearing that some sort of music service is also in the works. Flipkart are expecting a massive sales surge this year and Founder and CEO, Sachin Bansal is confident about increasing their revenue ten-fold.

This deal is seemingly a marriage of convenience for both parties as LetsBuy.com is currently looking at raising more money and Flipkart has cash reserves of $150 million. LetsBuy.com is considered to be the second biggest player in the e-commerce industry whereas Flipkart takes the first spot. Interestingly, Flipkart is valued at $850 million and LetsBuy.com is valued at $20-25 million.

The entry of Amazon in India via Junglee.com might have just spurred this development. Although Sachin Bansal said that Flipkart was not really threatened by Amazon, this may represent them fortifying their defenses against the advances of the online retail giant. The e-commerce space is growing rapidly in India but there is a nagging problem of customer loyalty which all e-commerce firms will have to work on.

What are your thoughts on this acquisition?