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Flipkart on Thursday said it will wholly acquire online travel aggregator Cleartrip. Though it did not disclose the financial details of the transaction, sources said that the travel firm has been valued at about $40 million. Post the transaction, Cleartrip will, however, continue to operate as a separate brand and retain all its employees.
For Flipkart, the addition of Cleartrip is a step towards business diversification. It will open up new avenues of monetisation for the company, said Arpit Mathur, partner at Kearney.
Also, Flipkart will get access to a share of some 80-100 million consumers who use online platforms to purchase services like hotel reservations, air tickets but do not necessarily shop for products on e-commerce websites like Flipkart and Amazon.
Of the estimated 500-600 million Indian data users, about 250 million consumers buy services online but only around 150 million of them purchase products. “With the acquisition, it will be easier for Flipkart to convert the service buyers into product buyers,” Mathur said.
Walmart-led Flipkart that competes with Amazon and Reliance in India is doubling down on the country which it counts as one of its major growth markets. The pandemic-led digital push has accelerated demand for e-commerce services and deep-pocketed players like the Tata Group are also entering the fray to leverage the opportunity. Walmart president and CEO Doug McMillion had said that India is a market where the company will “step on the gas” to ensure it has appropriate levels of investments in relevant areas.
Cleartrip has trailed in market share in the domestic online travel space which is led by MakeMyTrip. The firm’s West Asian business has rather been more profitable compared to the India business, said Madhur Singhal, managing partner & CEO at Praxis Global Alliance.
Although Cleartrip has grown well in the air travel space, their growth in other spaces like hotels, cabs, and holiday packages has been slow amid stiff competition from MakeMyTrip. “The deal with Flipkart is beneficial for them as they will get access to funds and captive customers from Flipkart and PhonePe network; this would provide the necessary impetus for growth and profitability for Cleartrip in the Indian market,” added Singhal.
The firm that counts DAG Ventures and Gund Investment Corporation among its investors is understood to have raised about $75 million in total funding.
“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,” said Kalyan Krishnamurthy, CEO at Flipkart Group.