India’s largest online retailer gears up for $1.5bn investment

Flipkart could begin another round of mega fund-raising as it expands its product range catering to a widening base of customers.

The Bengaluru-based firm will seek funding of about $1.5 billion and has begun shortlisting potential investors, according to two people with direct knowledge of the developments, The Economic Times reports.

“Talks haven’t begun yet and Flipkart is looking to target only a few investors that they want on board,” said an unnamed source involved in the funding process, expected to being in January 2015.

Flipkart declined comment on its fund-raising and investment plans. The company has raised a total of $1.2 billion this year and has just completed a round of festival sales marked by steep discounts.

“At the pace at which it is making investments, Flipkart will deploy most of the funds it has raised by around mid-next year,” said the source.

Discounting still accounts for a chunk of Flipkart’s monthly costs, with promotions costing it at least Rs 70 crore each month, according to a person who works with Flipkart at a strategic level.The company has also identified specific areas to pump in money, aiming to double in size by next year.

After the blockbuster festive season sales of October, when the company shipped around 80 lakh items versus 50 lakh on average, the company has revised its internal targets to reach sales of $4 billion by the end of the current fiscal, according to sources.

A major area of focus is increasing the categories in which they have leadership.Flipkart’s acquisition of Myntra built its lead in fashion, but the company needs push itself into several other categories.

The company will be offering packaged food and furniture “very soon”, said an unnamed Economic Times source. Rival Amazon India recently launched its gourmet and specialty foods category with over 155 Indian and imported brands. While Amazon is yet to launch furniture, Snapdeal already has a hold on the home-ware market.

“There are aggressive existing competitors and large offline players could come in very soon. It makes sense to extend its leadership now,” Arvind Singhal, chairman of retail advisory Technopak, told the Economic Times.

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