Erstwhile US e-commerce giant eBay has said that it will relaunch India business after exiting its investment in the country's largest online retailer Flipkart which on Wednesday announced a $16 billion investment from Walmart.
eBay said it would sell its entire holding in Flipkart which represents $1.1 billion in value to Walmart and exit the Indian firm. The company had ploughed in around $500 million in cash in addition to selling its India unit which was valued at around $500 million to Flipkart in a deal April 2017.
"eBay has notified Flipkart and Walmart that it intends to sell its holdings in Flipkart, which will represent gross proceeds of approximately $1.1 billion. Following the close of the transaction, we also will be ending our current strategic relationship with Flipkart,” the company said in a statement.
The company added that it would relaunch its service in India, initially offering a product that will focus on cross-border trade opportunities. Post its deal with Flipkart last year, eBay had entered into a strategic agreement to allow sellers on the Indian platform to access its customers globally.
While eBay had sold off its peer-to-peer e-commerce business to Flipkart, the company retained its technology staff who were supporting core IT requirements of the online retailer globally. It had setup a new unit ES Online which absorbed these employees post the sale of its business unit.
Despite entering India as early as 2004, eBay failed to make a dent in the market here. In 2017, the company thought it would make more sense to join forces with Flipkart than continuing to play by itself in one of the fastest growing markets for online retail globally. Its exit from Flipkart marks the end of that dream and puts it back in the position of having to build its business from scratch.
“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 company added in its statement.
The $1.1 billion the company will get from the sale of its stake in Flipkart represents virtually no gains as its total investment was counted at close to $1 billion including the sale of its India unit. It is unclear what Flipkart will do with eBay’s India unit which it had continued to run independently.