Last year, eBay appeared to throw in the towel in India after it sold its business in the country to Flipkart and took a minority stake in the country’s e-commerce leader. Now, eBay is making a u-turn.
In the wake of Walmart’s intention to buy a controlling stake in Flipkart for $16 billion, eBay has announced that it is among the investors that will be selling its stake in the business, in eBay’s case for gross proceeds of $1.1 billion. And along with that, it said it plans to relaunch eBay India, focusing not on domestic sales as it had done previously, but on cross-border sales: selling into India from abroad, and from India to other markets.
The short announcement doesn’t give too many details how it will progress on these future plans, but as part of it, eBay confirmed that it will be ending its strategic deal with Flipkart, which had included a license for Flipkart to use eBay.in and for the two companies to cross-promote products between the two platforms.
“We plan to relaunch eBay India with a differentiated offer to focus initially on the cross-border trade opportunity, which we believe is significant,” the company noted in a statement. “We believe there is huge growth potential for e-commerce in India and significant opportunity for multiple players to succeed in India’s diverse, domestic market.”
The announcement is not too surprising. India represents massive potential: the populous country is the second-biggest economy in Asia, and one of the fastest-growing globally, with a digitally-savvy population (35 percent of all Indians use the Internet, making it the second-biggest market in the world). In that regard, it would have been a surprise, and possibly a foolish choice, to retreat from India completely in the wake of Walmart’s acquisition.
On the other hand, eBay has had a mixed track record when it comes to leveraging the market opportunity. In addition to its own site that it had sold to Flipkart, eBay was a repeat investor in Snapdeal, another e-commerce marketplace in the country that has fallen on challenging times amid fierce competition in the market. Snapdeal has in the last year laid off staff, struggled with finances and failed to close an acquisition deal with Flipkart.
In a positive light, there is still a lot to play for, and by offering a differentiated opportunity focusing on cross-border sales, eBay could exploit a gap in the market that Walmart will not have the appetite to pursue. EBay doesn’t state this, but in an ideal world, it’s going into its plans with its eyes open, and based on purchasing patterns it’s been seeing in and out of the country in recent years.
We’re contacting eBay to see if the company can give us more details and we’ll update this post as we learn more.