Why is Flipkart selling minority stake to Times Group?

There are reports that the ecommerce leader Flipkart is looking to sell its stake to Bennett, Coleman and Co. Ltd (BCCL), also known as Times Group.

People close to the development revealed that this Rs. 500 crore deal between Flipkart and Times Group would be funded partially by cash and the remaining via ads.

In simple words, the media giant will pay by cash and publish ads across its media entities like The Times of India, The Economic Times, Times Now and ET Now in exchange of shares in the ecommerce firm.

The sources confirmed that it might take a while for the deal to finalize, but it will happen eventually.

“The talks are progressing slower than what both companies want but a deal is likely to happen,” added one source.

All is not well?

On one hand, CEO of Flipkart Binny Bansal ensures that everything is fine and that there’s enough cash in the locker. On the other hand, a spate of devaluations that has hit the marketplace tell a different story.

The company recently discontinued zero commissions program in less than 6 months of its launch and increased its seller commission rates, which has irked many sellers. Sellers have alleged that the change in fee structure and policies is the etailer’s way to make money at their expense.

Now with the news of selling stake to Times Group, we wonder if the marketplace is in deep denial or putting on a brave face in front of the media.

Flipkart’s recent efforts to increase revenue

• Introduced interest-free EMIs for customers to increase sales of high-priced products

• Launched C2C courier service to expand Ekart’s portfolio

• Roped in big brands to increase revenue, profitability

• Embraced rival Amazon’s tried-and-tested customer centric approach

• Changed Ekart’s delivery model

While Indian etailer Flipkart is collecting funds by selling stake and increasing seller commission, US-based Amazon is flush with funds. Will Amazon soon replace Flipkart on the leader-board in terms of ecommerce market share, like it replaced Snapdeal? It is very much possible.