Flush with a $4 billion war chest, Flipkart seems to have been mulling over making a strategic investment in multiple startups. After considering picking up stake in online ticketing firm BookMyShow, the Softbank-funded company has begun talks with online furniture marketplace Pepperfry for a strategic investment.
According to an Economic Times report, the discussion, which began last month, is in a preliminary stage without guarantee of the transaction. Importantly, Flipkart also held discussion for a possible acquisition of Pepperfry’s rival Urbanladder.
After closing massive $4 billion, Flipkart is eyeing investment in peripheral segments to drive more transaction. Over the past 18-20 months, the base of online shoppers has stagnant with only 10 million unique shoppers, who are transacting every month.
Unlike electronics and apparels, furniture is a high margin category with a large ticket size. The Bengaluru-based company has re-launched its furniture and grocery verticals after shutting them.
Pepperfry claims to have 65% market share of India’s organised furniture market with 25% margin.
In case Flipkart invests in Pepperfry, it will offer access to the catalogue of over 14,000 products. As per industry estimate, the online homeware and furniture retail market is expected to surpass $1.1 billion in revenue this year from $900 million in 2016.
Flipkart’s M&A approach marks a shift from its strategy of 2014-15 when it sought to build a venture capital-like portfolio by investing prolifically. In those two years, Flipkart invested in or bought more than a dozen companies, including fashion retailer Myntra, trucking marketplace Blackbuck and advertising tech start-up AdIquity.
Many of these were financial investments rather than deals that would boost the company’s business.
Flipkart was also in talks with Kishore Biyani to pick up 8-10 percent stake in Future Lifestyle Fashions. The company also initiated talks with home service marketplace UrbanClap, and food delivery platform Swiggy for possible investments.