E-commerce marketplace Flipkart has announced the acquisition of online travel firm Cleartrip.
According to Flipkart, it will acquire a 100% stake in Cleartrip and under the terms of the agreement, the Mumbai-based firm will continue to operate as a separate brand, retaining all its employees while working closely with Flipkart to further develop technology solutions.
“The Flipkart Group is committed to transforming customer experiences through digital commerce. Cleartrip is synonymous with travel for many customers, and as we diversify and look at new areas of growth, this investment will help strengthen our wide range of offerings for customers,” Flipkart Group CEO Kalyan Krishnamurthy said.
While the companies have not disclosed the deal size, media reports and sources aware of the development estimated it to be in the neighborhood of $40 million. Sources say this could be a distress sale for the company which had raised around $75 million in total risk capital from the likes of Lightbox and SAP Concur until 2016.
This acquisition can potentially accelerate Flipkart’s scale in the travel segment. The e-commerce major forayed into the travel segment in 2018 and started to double down its focus on the segment in the year when it partnered with Ixigo.
As of now, Ixigo is the only OTA partner of Flipkart. According to analysts tracking the space, Flipkart would now snap its ties with the former.
“Following the deal, ClearTrip is likely to be the only OTA partner for Flipkart. It will be a significant loss for Ixigo as about a quarter of its transactions comes from Flipkart,” said one of the analysts requesting anonymity.
Experts outline that there is little opportunity for smaller players in the overall travel segment. Both TravelTriangle and ClearTrip have struggled to stay afloat, they added. “OTA play is still a huge cash burn game and the pandemic has made it worse. We may see more consolidation this year,” said the person quoted above.