After financial product, Flipkart eyes OTA space to accelerate GMV

Flipkart

Homegrown e-commerce major Flipkart is planning to enter the online travel agency (OTA) space to offer bookings for flights, trains, buses and hotels for its users.

Flipkart, that is looking for a suitable candidate for category head position, might launch travel services through partnerships with existing players in the space, said a VCCircle report quoting persons close to the development.

This would be in sync with the company’s strategy to diversify into categories and drive more GMV (Gross Merchandise Value). Though the company has not yet made any official comments on the report.

Notably, Flipkart also had made re-entry into grocery space as it eyes to accelerate GMV numbers to justify $2.5 billion it raised from SoftBank.

Earlier, there was a report of merger talks between MakeMyTrip (MMT) and Flipkart. The talks of its merger started when Rajesh Magow, co-founder and chief executive officer (CEO) of MakeMyTrip, made come back on Flipkart board after a two-years gap.

Interestingly, both the companies share a common investor in Naspers, that reaped huge sum by selling its 2 per cent equity in Tencent. Naspers is a single largest shareholder in MakeMyTrip after goibibo’s acquisition by the Gurugram-based online travel major.

Flipkart CEO Kalyan Krishnamurthy also in an interview had emphasised on increasing monthly active users on the platform and diversification of business.

Seven months ago, Flipkart had raised a massive sum of $2.5 billion from Softbank. Currently, it’s also negotiating around $10 billion funding deal with US-retailer Walmart.

The inflow of funds, however, has put a new confidence in the company, that has earmarked $1.25 billion for acquisitions.

According to experts, traditional online retailers will move in the space. Travel is very interesting for many of them as it’s rather an easy vertical to crack for companies with experience in online retailing.

At present, around more than 40 per cent of all travel transactions are driven by online platforms including MakeMyTrip, Cleartrip, Goibibo, Yatra, and Goomo amongst others. The e-tailer move will further intensify the competition in the space with aforementioned players.

In November 2017, Flipkart re-launched its grocery delivery service while its rival Amazon has shown an aggressive approach towards grocery through dedicated category for the pantry.

Both the e-tailers continue to be locked in the battle for supremacy in India’s online retail market. So far, Amazon has deliberately avoided testing OTA segment. And this is where Flipkart senses an opportunity to sustain its market dominance.

Besides, to have an edge over its competitors, Flipkart is also planning to start selling insurance and financial products. Gradually, e-commerce behemoths in India including Flipkart and Paytm have been trying to play platform play. For uninitiated, Platform play is usually referred to companies who develop their own ecosystem through commerce, payment, and supply chain amongst others.

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