Can eBay regain its footing in India?

In the backdrop of the recent Walmart-Flipkart deal, there were reports that eBay might sell its stake in Flipkart worth up to $1.1 billion and exit the Indian company.

Although eBay was quick to issue an official statement, the one-time Indian e-commerce giant did not provide further details. It is clear that eBay is trying to rebuild itself in India, and the latest developments on this front are much more interesting.

When eBay sold its share of e-commerce business to Flipkart in early 2017, the company managed to retain employees who managed the online retailer’s core IT needs. Once the Walmart-Flipkart deal took shape, eBay made it clear that it was committed to re-listing in India as soon as possible.

eBay’s presence in the Indian market was not evident despite its presence in the country as early as 2004. eBay joined Flipkart in 2017, considering that Flipkart was one of the fastest-growing online retailers. However, by exiting Flipkart, it responded to the fact that its retail service was ready to build its business from scratch.

According to a press release from eBay itself, the company added that it will “relaunch services in India, initially focusing on cross-border trade opportunities. Upon closing of the transaction, we will also end our current strategic relationship with Flipkart, which includes unwinding our commercial agreement with Flipkart and terminating Flipkart’s license to use eBay.”

In 2017, eBay sold its Indian business to Flipkart, and in return, it bought a minority stake in Flipkart's business outlets. As part of the deal, Flipkart was given access to eBay's products by licensing them. This is an effective way to promote products on each other's platforms. This means that Flipkart's customers can access eBay's global products, while Flipkart earns profits by reaching eBay's global customers.

eBay joined Flipkart in 2017 and signed a four-year exclusive business agreement. However, with the alliance between Walmart and Flipkart solidified, eBay chose to cut ties with Flipkart.

After the Walmart-Flipkart alliance was formed, Sachin Bansal (former Flipkart CEO) made a gain of $1 billion (Rs 6,740 crore) by selling 5.5% stake. Even after paying capital gains tax, Bansal has pocketed $1 billion. He said, "We need to do what China did 15 years ago and tell the world that we need your money but we don't need your companies... We need to take a more India-centric approach instead of trying to be an ideal country based on standards set by other countries."

Flipkart's main obstacle is that most of its shares belong to foreign investors. Sachin Bansal's billion dollars was reportedly just a pipe dream, but now it has finally become a reality. After reports that Sachin Bansal was forced to exit Flipkart after Walmart's acquisition, the whole of India began to watch his next move.

Some people familiar with the Walmart-Flipkart deal said Bansal is working on various options, including helping eBay rebuild itself in India. eBay, the world's ninth-largest Internet company, is seeking a dynamic leadership position to regain a foothold in the world's fastest-growing Internet market.

While the talks are at an early stage, an anonymous source confirmed that it all depends on how eBay repositions itself in India. If eBay decides to take Flipkart and Bansal head-on, there is a chance that they could enforce the non-compete agreement for the next few years.

CEO Devin Wenig tweeted that eBay will focus on bringing imported inventory to India and opening up the global marketplace to Indian retailers. eBay's stock rose 1% soon after his tweet, and is up 14% over the past year, according to CNBC.

India is now a hot sector for retailers. Amazon CEO Jeff Bezos has reportedly made a bid for a majority stake in Flipkart, following through on a 2016 announcement that he planned to invest $3 billion in India.

In this case, eBay is not going to divulge too many details about the relaunch or related future plans in the short term. However, it is taking on a market gap for its own profit by offering a differentiated opportunity focused on cross-border sales. Even if eBay succeeds in piggybacking on Bansal directly or indirectly, it will be interesting to see the strategy of the Internet giant to enter the world's most promising Internet market in the wake of the changing market dynamics.