Flipkart secures $350 million from Google in latest funding round

The Indian e-commerce sector was buzzing on Saturday, 25 May 2024, after reports of Google investing $350 million in Flipkart, the Walmart-owned online marketplace, bringing the company's valuation to nearly $36 billion.

Flipkart announced that Google has joined as a ‘minority investor’ in the latest funding round, led by Walmart. This investment is part of Flipkart’s ambitious $1 billion fundraising effort, with Walmart contributing $600 million at a 5–10 per cent premium to Flipkart’s previous valuation of $33 billion.

Flipkart is poised for rapid expansion into quick commerce, aiming to compete with established players like Zomato’s Blinkit, Swiggy’s Instamart and Zepto.

This move comes at a pivotal time, coinciding with Flipkart’s strategic shift towards diversifying its revenue streams, including a foray into the fintech sector as well. Recently, Flipkart introduced UPI payments, personal loans and insurance broking services.

In March 2024 alone, the platform recorded 5 million UPI transactions worth Rs 197.24 crore, highlighting the growing significance of its fintech operations. However, with many new entrants in the UPI market, Flipkart will require substantial capital to attract and retain users.

The company’s quick commerce initiative is expected to launch in a dozen cities by June 2024. This sector, particularly in grocery delivery, is crucial for Flipkart’s strategy, given its existing grocery vertical experienced a 1.6x year-on-year growth in FY2023–24.

The successful expansion into quick commerce, a field demanding high capital and operational expenditure, is essential for Flipkart, as it prepares for a highly anticipated public listing. Discussions are reportedly underway within the company regarding the best strategy to re-domicile to India in preparation for the IPO.

The Google investment comes soon after Flipkart’s marketplace entity in India got an infusion of Rs 1,421 crore (around $170 million) from its Singapore parent in April 2024, just a month after an Rs 924 crore ($111 million) infusion.

Walmart International president and CEO Kathryn McLay recently remarked on the premiumisation in the e-commerce category that is enhancing Flipkart's business profile. While McLay did not confirm the timing of a potential IPO, the focus remains on showcasing a clear path to profitability to meet high market expectations.

Group CEO Kalyan Krishnamurthy indicated that Flipkart is nearing profitability, significantly reducing its monthly cash burn, with the travel business identified as a key growth engine.

For Google, the investment is largely being seen as timely, aligning with the growth of India’s digital economy. Flipkart in a statement mentioned that the partnership and the associated Cloud collaboration with Google will support its business expansion and the modernisation of its digital infrastructure to better serve customers nationwide.

Founded in 2007, Flipkart has been a crucial stakeholder in India’s digital commerce revolution, with millions of sellers, merchants and small businesses making a living of it.

The platform claims to cater to a registered user base of over 500 million and offers more than 150 million products across 80+ categories. It hosts over 1.4 million sellers, including those on Shopsy, a B2C e-commerce platform it launched in 2021.

Earlier this week, Flipkart reported a 1.6x year-on-year growth in its grocery business and the establishment of 16 grocery fulfilment centres across key locations in India. This growth underscores the company’s strategic initiatives and its commitment to scaling operations amid increasing competition in the e-commerce landscape.