Flipkart acquires Cleartrip for $40 million, why Indian e-commerce players are diversifying into travel sector?


Bengaluru-based e-commerce company and Walmart-backed Flipkart on April 15, 2021, announced its plan to acquire Cleartrip for $40 million. In a bid to diversify its e-commerce offerings, Flipkart will acquire a 100 per cent stake in one of the oldest travel booking company in India, Cleartrip.

Cleartrip will continue operating as a separate brand with Flipkart towards diversifying the product offerings for the customers. Flipkart will retain all the employees of Cleartrip.

The acquisition move on the part of Flipkart comes during a time when the company was looking into new areas of growth and ways to foray into travel and hotel bookings on its platform. Flipkart envisions leveraging the technology capabilities and deep industry knowledge of Cleartrip to offer and enhance travel experiences for customers.

About Cleartrip

•Hrush Bhatt, Stuart Crighton, and Matthew Spacie founded Cleartrip in 2006. It went on to become one of the pioneer and oldest travels booking company in India.

•With headquarters based in India and Dubai, the company offers services as an online travel booking platform for train tickets, flights, hotel reservations across India and the Middle East countries.

•In 2021, after laying off around 500 employees due to a stressful financial year during the pandemic, Cleartrip entered into talks with Flipkart for acquisition.

About Flipkart

•Flipkart was founded by Sachin Bansal and Binny Bansal as an e-commerce company in 2007.

•Flipkart is headquartered in Bengaluru, India. The company had initially started as an online bookseller platform and later expanded into consumer electronics, lifestyle products, fashion, essentials, etc.

•Walmart had acquired a 77 per cent stake in Flipkart in 2018.

About e-Commerce in India

•The pandemic since 2020 triggered a significant increase in the number of online shoppers. The Indian e-commerce players such as Flipkart, Amazon, Myntra, Nykaa, etc witnessed an unprecedented demand as millions of people turned to online shopping due to social distancing and lockdowns.

•According to a report by Deloitte India and Retail Association of India, the boom in the e-commerce market is highly driven by factors such as:

a) Increasing number of internet users, which is expected to reach from 432 million in 2016 to 647 million by 2021. This will boost the percentage of internet users to 59 per cent in 2021 as compared to 30 per cent in 2016.

b) Increasing number of online shoppers, which is currently at 15 per cent of the online population and is expected to be at 50 per cent by 2026.

c) Increasing number of smartphone users, which is expected to reach around 450 million by 2021 as compared to 260 million in 2016.

•Other than these, the convenience and consumer experience, need for personalization, and the value delivered by brands are also among various factors that are boosting the e-commerce market in India.

•Speaking of the travel and hospitality sector, as per a report by EY, the travel and hospitality sector has been embracing e-commerce and leveraging digital technologies to offer personalized and enhanced customer experiences. With COVID-19, the travel industry witnessed a significant loss and therefore, the Indian startups and market players are venturing into local experiences, short staycations, robot room services, mobile check-ins, contactless travel offerings, etc to cope with the non-existent demand for traditional services, changing market dynamics and tap into new revenue and growth areas.

•To be noted here, Cleartrip has a diversified portfolio of product offerings such as local experiences that included food trails, workshops, and cycle rides around the cities, etc.

•Overall, the market experts predict that the Indian e-commerce market is on a high-growth trajectory and is expected to grow from USD 24 billion in 2017 to USD84 billion in 2021.

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