Flipkart in talks to buy eBay India (EBAY)

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Flipkart is reportedly in talks to acquire eBay’s India business to bolster its market-leading position in the country's e-commerce sector as it faces new competition from Amazon and potentially Alibaba, according to Mashable.

eBay launched in India in 2004, almost a decade before Amazon entered the country, but found little success in its nascent e-commerce space. It has the sixth-largest share of India’s e-commerce market, and previously tried to expand its presence in the country by acquiring Snapdeal, but failed to close an acquisition. Now, it seems that eBay is looking to pull out of the Indian e-commerce market by selling off its regional operations, and investing in Flipkart instead.

The deal will reportedly be structured as part of an ongoing fundraising effort by Flipkart to raise $2 billion in new capital. Flipkart recently raised $1 billion in a new funding round, with eBay as one of the principal investors, and it's seeking an additional $1 billion from investors including eBay, Microsoft, and Tencent. That extra funding is reportedly contingent on its acquisition of eBay’s India operations. Flipkart needs the capital injection due to intense competition from Amazon, which increased its shipments in India by 150% year-over-year (YoY) in the first quarter of last year. In addition, Alibaba recently led a $200 million investment round in Paytm E-Commerce Pvt, a new e-commerce startup in India spun out of the country’s popular Paytm digital payments service.

India has drawn the interest of Amazon and Alibaba because its burgeoning e-commerce market is set for explosive growth in the next few years. The country’s total e-commerce sales reached $16 billion last year, according to Forrester. And that total is expected to grow at a compound annual growth rate (CAGR) of 31% to hit $64 billion in 2021, by far the fastest growth rate of any e-commerce market in APAC, Forrester predicts. With more than 1.2 billion consumers, India’s enormous market is a potential gold mine for e-commerce companies that can gain significant market share there.

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