Home > Strategy > What happened to LetsBuy? Being choked to death by new parents!

What happened to LetsBuy? Being choked to death by new parents!

A few weeks ago, when Flipkart acquired LetsBuy (for a rumored amount of $25 million), there was a lot of speculation on what might be the future for the two.  I had also put forward my two cents in an earlier blog post  on where the online retail space is heading to. Flipkart management, in various statements had mentioned that LetsBuy will keep functioning as a separate entity.  But, as things are folding out, it seems that LetsBuy as a brand will not exist anymore.

There have been reports that all the warehouses of LetsBuy, except the one at Delhi, have been closed. There are also reports that 250 odd staff of LetsBuy at Gurgaon will be laid off.

So what actually happened?

One can only guess, and here is what I think what could have happened. I have three strong reasons which would have made the management think of shutting down LetsBuy

First, both the companies Flipkart and LetsBuy had same set of investors- Tiger Global and Accel Partners. Flipkart, which had majority of its revenues coming from the sale of books and smaller electronic items, had been expanding its scope of operations. Although LetsBuy had a wider range of products to sell, the scale was much smaller than Flipkart. Of late, it had been struggling to raise capital from investors. It made sense for the current investors to mediate and help Flipkart take over Lets Buy than infuse m0re funds into Lets Buy and increase competition for Flipkart.

Second, both Flipkart and Lets Buy had operations in major cities. It did not make sense for the management to keep a parallel set of operations for both the entities. The set of cities in which the Lets Buy warehouses have been shut down already have warehouses of Flipkart.

Third, having a separate brand for selling similar items again doesn’t make sense. Also note, LetsBuy’s prices for consumer electronics were slightly lesser than those published by Flipkart. Although LetsBuy does have some brand recall in the mind of consumers, but Flipkart is a much recognized brand. Thus, killing LetsBuy makes all the more sense than keeping it.

All said and done, what was hailed as a marriage of convenience for Flipkart and LetsBuy, did not turn out so. There is more than what meets the eye. The guys front ending Flipkart (Sachin and Binny Bansal) are just the show and mouth piece of bigger players controlling the show- the investors.

  1. May 21, 2012 at 4:56 pm

    I had thought they would merge eventually. One eCommerce player taking over another, and still keeping both operating, sort of doesn’t make sense.
    I would think that merging the operations would have been on their mind when FlipKart bought LetsBuy.

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