eBay India shuts down; Flipkart to launch marketplace for refurbished goods
eBay launched in India 2004 but failed to capitalise on the country’s growing e-commerce market in the following years. Last year, the company sold its India unit to the local e-commerce giant Flipkart.
Flipkart is shutting down eBay India. Starting Tuesday, eBay India will stop taking new orders and is now directing users to Flipkart to buy and sell.
"eBay India will cease to exist. We will be launching a new value platform starting with refurbished goods very soon," said Flipkart in a statement.
Flipkart had acquired eBay's India unit last year as it raised $1.4 billion from global technology majors such as Tencent and Microsoft. Along with selling its India arm, eBay had also invested $500 million for an equity stake in the Indian e-commerce giant.
"eBay.in has stopped accepting new orders. You can still register an eBay account on www.eBay.in and continue to buy and sell on www.eBay.com or other eBay sites internationally. Please visit www.flipkart.com to buy and sell within India," says eBay on its website.
Users cannot use their eBay.in account to buy and sell products on Flipkart. Users have until August 30, 2018 to raise 'eBay Guarantee claims' for refunds.
"Your purchase history will remain available on My PaisaPay and My eBay until further notice. Your warranty will remain valid till its validity date. Please contact eBay.in customer support for any issues regarding your item," the website adds.
What next for Flipkart
Flipkart is now planning to kickstart a new platform to sell refurbished goods - a segment that has stayed untapped by the e-commerce players in India.
According to a recent report in March this year, the global market for refurbished smartphones grew 13% year-on-year in 2017, reaching close to 140 million units. It also highlighted that India was one of the fastest growing mobile phone market for refurbished devices. At the moment, the segment has smaller players like Togofogo, an online market place which claims to have a 35% market share.
"Based on our learnings at eBay.in, we have built a brand new value platform launching with refurbished goods - a large market which is predominantly unorganised... As part of this launch, we will be stopping all customer transactions on eBay.in on 14th August, 2018 and transitioning to the new platform," Flipkart CEO Kalyan Krishnamurthy said in an email to employees last month.
eBay India: A difficult journey
eBay had launched in India in 2004 through Bazee.com. The company also invested in e-commerce firm Snapdeal in 2013 but had to write off $61 million investment in February this year.
Despite having an early mover advantage, eBay continued to bleed in the Indian market. The company lost a significant amount of market share to Flipkart and Snapdeal. The competition intensified further with Amazon's entry into the Indian market.
Apart from losing revenues, eBay faced a poor reputation among buyers and sellers. Customers were largely unhappy with the growing number of fake listings and poor customer support, according to a Forbes report in 2016.
eBay CEO Devin Wenig said in an interview to Recode that the Indian e-commerce market had overheated and was no longer rational.
"I'll start by saying I really do believe the market will be a strong commerce market. There are just too many positive dynamics: Too much growing wealth, too much tech adoption, too much demand for goods and supply-demand imbalance," he said.
"It's also true that the market has been overheated, not rational, and probably over-invested in too many companies. It's been a very unhealthy e-commerce dynamic for a few years. The conclusion was, it was going to have to consolidate, that fewer parties were probably a good thing for the market. Flipkart had a very strong close to last year and they are starting to pull away. So if we are serious about the market, I want to invest in — and be partners with — those that are going to win."
In May this year, eBay announced ending partnership with Flipkart and promised to relaunch eBay with a newer approach.
"eBay has notified Flipkart and Walmart that it intends to sell its holdings in Flipkart, which will represent gross proceeds of approximately $1.1 billion. Following the close of the transaction, we also will be ending our current strategic relationship with Flipkart, which includes unwinding our commercial agreements with Flipkart and terminating Flipkart's license to use the eBay.in brand," the company said.
"We plan to relaunch eBay India with a differentiated offer to focus initially on the cross-border trade opportunity, which we believe is significant. We believe there is huge growth potential for e-commerce in India and significant opportunity for multiple players to succeed in India's diverse, domestic market."