The discussions are reportedly only at a preliminary stage and may not culminate in a deal.

Flipkart may be in talks with Pepperfry for strategic investment
Atom M&A Thursday, November 09, 2017 - 09:40

With an excess of $4 billion of cash on its balance sheet, ecommerce major Flipkart has initiated yet another set of talks for strategic investments. This time, reports suggest that it is in talks with furniture marketplace Pepperfry. This is part of Flipkart’s attempt at diversifying its business through strategic investments and acquisitions, reports the Economic Times.

The discussions are reportedly only at a preliminary stage and may not culminate in a deal.

Last month, news reports quoted sources at Flipkart saying that it will continue to scout for opportunities across categories to diversify business and gain an edge over Amazon India.

Mint reported on October 23 that Flipkart met with startups such as Swiggy, Urban Clap, UrbanLadder and a few insurance and wealth management startups for possible investments.

Earlier in October, there were reports of Flipkart looking to buy a large minority stake in Bookmyshow.

Flipkart’s interest in Pepperfry comes nearly a months after it relaunched its furniture business just ahead of the festive season, delivering to 84 cities. Furniture happens to be a high gross margin yielding category. Its reported interest in UrbanLadder could also be on the same lines.

The Indian homeware and furniture retail market was pegged at $900 million in 2016 and is expected to cross $1.1 billion in revenue this year.

ET reports that Pepperfry holds 65% share in India’s organized furniture market and makes an average of 45% gross margins on each product across home furnishings and appliances. The furniture category, on the other hand, brings in 55% margins. The average pricing of Pepperfry’s furniture category is about Rs 18,000. 

If the deal finalizes, Flipkart will gain access to Pepperfry’s range of over 14,000 items.

Flipkart is reportedly looking to adopt the model followed by large Chinese internet companies and turn itself into an ecommerce conglomerate.

As part of its diversification, it also re-launched the grocery category as Amazon aggressively expands its grocery delivery offering Amazon Now in India.

Another reason for its diversification could also be Amazon’s diverse business offerings globally and in India as well. Amazon launched Prime in India, which saw immense success. Additionally, it also launched grocery, Prime video and is reportedly going to launch its audio streaming service Audible in India. 

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