According to this report by Medianama, Flipkart is acquiring LetsBuy.com for $15 to $20 million. This will make Flipkart the undisputed leader of online retailing in India.
This announcement gains another perspective in the backdrop of Amazon making plans to move into the online retailing business. It has already launched Junglee.com, a price comparison website.
Will it drive up prices on Flipkart?
LetsBuy has the reputation of being aggressive about pricing while Flipkart concentrates on delivery. Usually with no competition in sight, Flipkart might be tempted to drive up prices. But it can hardly afford to do that as Amazon’s entry into the market might be around the corner.
Here is a graph from Google Trends comparing interest from India in Amazon, Flipkart and LetsBuy.
The graph clearly shows that even if Amazon is not yet in India, there is immense interest about it which almost matched Flipkart at times in the last 12 months. So Flipkart will have its work cut out to keep improving its portfoilio and infrastructure.
Flipkart has done something that most online retailers did not do before them. This was to take a leap of faith with the ‘Cash on Delivery’ payment model. Most Indian users are not comfortable putting out personal data like bank details and credit card details online to buy things. Flipkart also leverages ‘Cash on Delivery’ model in its advertisements. Any new entrant in India, even if it is Amazon, will have to get into the Indian online buyers psyche before hoping for success.
What are your views on the state of online retailing in India? Do drop in your comments.