SoftBank Group’s Masayoshi Son has set up a direct clash with Amazon.com Founder Jeff Bezos after the Japanese firm’s Vision Fund armed India’s largest online retailer Flipkart with fresh capital to take on the American giant.
The fund will invest about $2.5 billion, of which around $1.5 billion will go directly to Flipkart and the rest to acquire part of existing investor Tiger Global Management’s stake, Bloomberg reported quoting people familiar with the matter. This makes SoftBank one of the largest investors in the homegrown e-tailer.
Flipkart now has more than $4 billion in cash, much-needed ammunition to take on Amazon which has already invested nearly $2 billion of the $5 billion the online retailer committed to investing in India.
The deal gives Softbank another opportunity in India’s e-commerce market after its failed investment in Snapdeal.
The Japanese billionaire, who owns about a third of Snapdeal’s parent Jasper Infotech Pvt, tried unsuccessfully to combine the e-tailer with its larger rival. He then decided to back Flipkart instead.
A battle with another billionaire is nothing new to Son. He financed a similar clash in China by backing Alibaba Group Holdings, first to defeat eBay and then keep Amazon away. He clearly has taken the first step.
“There has been a question of how much capital is required to take on Amazon with its aggressive expansion in India,”Ganesh Krishna, a serial entrepreneur and partner at GrowthStory
“That argument is settled” with SoftBank on board at Flipkart, Ganesh added.
The Indian e-commerce story is more or less about Flipkart and Amazon now, with Snapdeal being a distant third. And it’s gone past the phase of acquiring customers.
“You don't have to focus much on acquiring customers, but on how to retain them,” said Satish Meena, senior forecast analyst at market researcher Forrester. According to him, Flipkart can now focus on building its product offering and service without worrying about cash.
Son also made clear its intentions on India when he said that SoftBank would “support innovative companies that are clear winners”. Snapdeal didn’t go down the way he planned. Ride-hailing app Ola, Son’s other big bet in India, is also locked in a battle with another American giant, Uber. The Japanese group incurred a combined loss of $1.4 billion on the two investments in the year ended March, according to its annual report.
“Flipkart was the only option if they wanted to stay relevant in e-commerce,” said Meena.
Also Read:
Jeff Bezos Briefly Bags World’s Richest tag in La La Land Moment
Amazon Stock Doubles as Jeff Bezos Becomes World’s 2nd Richest Man
Amazon CEO Jeff Bezos Says 8th Generation Kindle Is “Almost Ready”
(Love your mother tongue? This Independence Day, tell The Quint why and how you love your bhasha. You may even win a BOL t-shirt! Sing, write, perform, spew poetry – whatever you like – in your mother tongue. Send us your BOL at bol@thequint.com or WhatsApp it to 9910181818.)