In the backdrop of the recent Walmart-Flipkart deal, reports claimed that eBay could possibly sell its stake in Flipkart that represents as much as $1.1 billion in value to Walmart and exit the Indian firm. While eBay was quick to release the official statement, there were no additional details provided by the once the e-commerce behemoth in India. However, it was clear that eBay is trying to re-establish itself in India, and the latest development in this regard is far more interesting.
In early 2017, while eBay had sold off its e-commerce business share to Flipkart, the company managed to retain its staff who were managing the core IT requirements of the online retailer. Post Flipkart-Walmart deal eBay made it clear that the company is working on relaunching itself in India soon.
Albeit, eBay has debuted in India as early as 2004, it couldn’t mark a presence in the market here. Considering the fact that Flipkart was one of the fastest growing online retailing space, eBay joined Flipkart in the year 2017. However, by making its exit from Flipkart, it echoes the fact that the retailing service is ready to build its business from scratch.
As per press release by eBay itself, it adds that it would relaunch its service in India, initially focusing on cross-border trade opportunities.
Following the close of the transaction, we also will be ending our current strategic relationship with Flipkart, which includes unwinding our commercial agreements with Flipkart and terminating Flipkart’s license to use the eBay.in brand – eBay
eBay sold off its Indian business to Flipkart in 2017, and in return, made a purchase of a minority stake of the commercial outlet. As part of the deal, eBay products could be used by Flipkart under license acquired. This was an effective way to promote their products on each other’s platforms. This meant that Flipkart’s customers could access eBay’s global products while Flipkart made profits having access to eBay’s global customer. eBay joined Flipkart in 2017 and signed up for a four-year exclusive commercial agreement. However, with the cemented alliance of Walmart and Flipkart, eBay has chosen to sever the ties, which had 3 more years to go.
Could Sachin Bansal Be A Game Changer for eBay
Post the Walmart-Flipkart Alliance, Sachin Bansal has earned billion dollars (or Rs 6,740 crore) by selling his 5.5% stake. Even after coughing up capital gains tax, Bansal has cornered a billion dollar.
“What we need to do is what China did (15 years ago) and tell the world we need your capital, but we don’t need your companies.. We need to take a more India-centric approach than trying to become an ideal country based on standards set by the rest. – Sachin Bansal
The major hurdle for Flipkart was that it had a bulk of its shares which belonged to foreign investors. These investors funded the losses throughout its tenure. Reportedly, Sachin Bansal, whose Billionare stance was merely quixotic until now, has finally become a real one.
After the reports claiming Sachin Bansal was forced to exit Flipkart after Walmart acquisition, the whole India has set its eye on the next move of the Bansal.
Some of the people familiar to the Walmart-Flipkart deal have claimed that Bansal is juggling with various options, and helping eBay rebuild itself in India is one of it. eBay, which is the world’s ninth-largest internet company, is seeking a dynamic leadership to reestablish itself in the world’s fastest growing internet market.
While the talks are at a very early stage, a person confirmed on the condition of anonymity, it completely dependents on how eBay wants to re-position itself in India. eBay could, possibly, hit the wall if it decides to take Flipkart head-on with the Bansal, who might be under the obligation to honour the non-compete agreement for the next few years.
Long-and-short of the e-commerce parley:
CEO Devin Wenig took to twitter mentioning that, eBay will focus on bringing imported inventory to India and opening up global market to Indian retailers. As per reports by CNBC, Shares of eBay gained 1% soon after his tweet, which is an increase of 14% over the past year.
India is now the most sought-after domain for retailers. Amazon CEO Jeff Bezos reportedly made a bid for a majority stake in Flipkart, complying with the announcement made in 2016 wherein he planned to invest $3 billion in India.
Having eBay in this context, the short announcement doesn’t give away too many details about the relaunch or associated future plans. However, by offering a differentiated opportunity focusing on cross-border sales, it is hosting a market gap for its own profit. Even if eBay succeeds in roping in the Bansal directly or indirectly, it would be interesting to see what strategy the internet giant employe to penetrate the world’s most promising internet market after the changed market dynamics.