Flipkart acquires Letsbuy.com

The buyout gives Flipkart further advantage in the consumer electronic retailing space.

Putting rumours to rest, the e-commerce major Flipkart.com announced that it has acquired electronics retailer Letsbuy.com in a cash-cum-equity deal. With the move, Flipkart has further strengthened its footing in the consumer electronic retailing space.

Post the acquisition, the founders of Letsbuy, along with the entire team, will continue to function independently, and will have access to Flipkart's technology platform and supply chain capabilities. The deal is expected to be healthy for both companies, allowing them to expand at a faster rate, and give the combined entity a much larger share in the consumer electronics market.

Sachin Bansal, co-founder and chief executive officer, Flipkart, says, "This acquisition fits into Flipkart's strategy of building dominant shares in all categories of operation. It already leads in the books and media verticals. Given that it managed to build a leadership position in consumer electronics as well since its launch in early 2011, it made sense to consolidate when the opportunity came up."

Bansal adds that the acquisition opportunity came at an attractive price and at an ideal time. He hopes that the deal will allow Flipkart to get to a share similar to what it enjoys in the online books category.

"Letsbuy.com has experienced a phenomenal growth in the last one year and holds a dominant position in the e-commerce industry in India. We believe that our expertise in computers, communication and consumer electronics categories, matched with Flipkart's superior technology and supply chain, can be a killer combination," says Hitesh Dhingra, founder and chief executive officer, Letsbuy.com.

While Letsbuy had a choice to raise a large round of funding as well, aligning the business with Flipkart made sense as the resultant synergies will guarantee customers better service and options, says Dhingra.

The deal has also been welcomed by investors of both firms. According to Helion, the lead investor in Letsbuy.com, the combined strength of the two players is formidable and will be able to deliver a stronger value proposition to customers.