Flipkart gets $350 million cash transfer from Google

Google has made a $350-million investment in Flipkart but will not get a seat on the e-commerce major’s board, a person familiar with the matter said, adding that the transaction valued Flipkart at $36 billion.

Flipkart formally acknowledged the investment but did not disclose the amount proposed to be invested by Google. “As part of the latest funding round led by Walmart, Flipkart today announced that it will be adding Google as a minority investor, subject to receipt of regulatory and other customary approvals by both parties,” the e-commerce retailer said in a statement on Friday.

Walmart-owned Flipkart further stated that Google’s proposed investment and its cloud collaboration will help Flipkart expand its business and advance the modernization of its digital infrastructure.

This is Flipkart's second association with a big-tech giant. In 2017, it partnered with Microsoft to adopt Azure as its exclusive public cloud computing platform.

At the time, Microsoft had said Flipkart will leverage artificial intelligence, machine learning and analytics capabilities on Azure—such as the Cortana Intelligence Suite and Power BI—to optimize its data for innovative merchandising, advertising, marketing and customer service.

As per various reports, Flipkart is in various discussions to move its domicile to India from Singapore to list in the public markets. Walmart’s CEO Kathryn J. McLay also emphasised that the company is “looking and exploring when will be the right time to IPO” in a post-earnings call with analysts last week.

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“Their business has grown, we've seen Myntra (Flipkart's subsidiary) get to Ebitda positive for the last two quarters. We've seen a growth in some premiumization and all of that is lifting the profile of the Flipkart business," McLay said, adding that they are on the track to a growth trajectory. Ebitda refers to earnings before interest, tax, depreciation and amortization.

Pacy ambition

The investment from Google comes at a time when the company has been making efforts to relaunch its quick commerce vehicle as a part of its larger ambitions to sell everything and stay relevant.

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While the company has historically not been a fast delivery company with most deliveries taking over two days, McLay said it has made same-day delivery available to millions more customers as it expanded the offering to 20 cities in India.

Flipkart has had earlier brushes with quick commerce, with Nearby in 2015 and Flipkart Quick in 2020, but both had to be shut down for various reasons.

Flipkart's slow delivery system is due to its focus on bigger warehouses instead of fragmented ones. However, its rival Amazon has more fragmented warehouses, which helps it deliver within 24 hours.

Flipkart reported a revenue of ₹55,823 crore in FY23, compared with ₹50,992 crore a year earlier. However, its losses also widened to ₹4,897 crore from ₹3,413 crore in the same period.

The company has also been on a mission to cut costs. In January, Flipkart laid off about 5% of its total workforce, or nearly 1,000 employees, as a part of its annual performance review cycle. While it carries out these routine job cuts every year, the layoffs were also aimed at reducing costs.

Founded in 2007 by Binny Bansal and Sachin Bansal, the company started as an online bookstore. Today, it claims to have more than 500 million users and offers more than 150 million products across 80+ categories. Some of its subsidiaries include Flipkart Wholesale, Flipkart Health+ and Cleartrip.