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FlipKart acquires LetsBuy.com: Let the consolidation games begin!

FlipKart has acquired ecommerce portal LetsBuy.com, MediaNama
reports. Launched in July 2009, New
Delhi-based LetsBuy.com had raised $6 million in venture capital funding from
Helion Venture Partners, Accel Partners and Tiger Global in January 2011. Sources inform us that the deal has been finalised at $25 million.

FlipKart has acquired ecommerce portal LetsBuy.com, MediaNama
reports. Launched in July 2009, New
Delhi-based LetsBuy.com had raised $6 million in venture capital funding from
Helion Venture Partners, Accel Partners and Tiger Global in January 2011. Sources inform us that the deal has been finalised at $25 million.

LetsBuy.com was founded by Hitesh Dhingra (founder and CEO)
and Amanpreet Bajaj (co-founder and COO). Manish Vij, the co-founder of the Vun
Network, and Nitin Gupta (former country manager, South Asia at MasterCard and
former president and COO at Rediff.com) have made angel investments in
LetsBuy.com.

Sachin Bansal, co-founder and CEO FlipKart, said, “This
acquisition fits into our strategy of building dominant shares in all
categories we operate in. We are already leaders in the books and media
verticals. Given that we managed to build a leadership position in consumer
electronics as well since its launch in early 2011, it made sense for us to
consolidate when we saw this opportunity. This acquisition opportunity came at
a very attractive price for us and the timing has also been ideal. The
synergies will now allow us to accelerate faster and get to a share similar to
what we enjoy in the online books category”.

Hitesh Dhingra, founder and CEO, Letsbuy.com,
said “Letsbuy.com has experienced a phenomenal growth in the last one year
and holds a dominant position in e-commerce industry in India. The Company had
a choice to raise a large round of funding as well, however aligning our
business with the largest player in the market made sense as the resultant
synergies will guarantee our customers the best possible service, price and
selection.”

FlipKart is on an acquisition drive as in November 2011, the
company had bought “assets of” Chakpak.com. It is also building an
online music store and had recently acquired book recommendation engine WeRead
and digital music firm Mallers, Inc. 

As far this deal is concerned, it seems to be a smart move
for both the companies as FlipKart has $150 million in the bank and LetsBuy has
been trying to raise its second round for a while.

In our year end feature, Sachin Bansal of FlipKart said that
2012 will further define the contours of this fast growing industry and online
shopping expectations will get better defined. He also hinted that larger
players will emerge in this space, thus fuelling further investments and growth
in the ecosystem.

The upward spiral of the ecommerce graph in India is making
this space vulnerable to have more casualties. Online retailer Taggle.com had
shut operations in December 2011 attributing its demise to irrational price
wars. Most certainly, amongst the rest of the pack, some consolidation will happen, perhaps driven by the common VC factor.

In fact, industry watchers say ecommerce is beginning to
resemble the deal sites mad rush 18 months back and online advertising network
sector during its in 2008, when a number of them had started up.

At present, there are numerous ecommerce sites in the
country. And almost everyone says it is only a matter of time before there is a
shakeout in this increasingly crowded market. What do you think?

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