Flipkart Buys Social Book Discovery Tool WeRead

6 years ago

Accel Partners backed ecommerce site Flipkart has acquired social book discovery tool WeRead from Lulu, a US-based on-demand publishing firm. The deal amount was not disclosed.

Launched by Bangalore-based startup Ugenie, weRead is a social book discovery engine that enables users to recommend and discover books, search for authors, rate and review books as well as share and network with other book lovers. Ugenie received $5 million in funding from BlueRun Ventures and Sierra Ventures in 2006 and was acquired by Lulu in August 2008. 

weRead’s widget is available on Facebook, Orkut, Yahoo, MySpace and Hi5. It has registered 3 million readers and has 60 million books listed and users can also read some books online via   weReader.

Bangalore-based Flipkart started off as an online book store and now has 7 million book titles. It recently expanded into new product categories such as movies, music, games and handsets. 

Sachin Bansal, CEO, Flipkart, said, “Acquiring weRead will take our relationship with our customers to a wider plane where we will be their partner in the entire book reading experience – right from purchase to referrals. This would enable us to suggest the most relevant books to our readers based on their previous purchase patterns as well as the kind of books they and their friends like. At Flipkart, all our growth till now has been organic in nature. However, to deliver the best in class service to our customers, we have started to look at acquisitions that will complement our current service offerings. weRead is one such step in this direction.”

The weRead acquisition will give Flipkart a social recommendation platform for buyers to make informed decisions based on recommendations from people within their social network. Currently weRead directs readers to Amazon’s shopping cart, this could also be sent towards Flipkart’s site. Flipkart refused to comment.

According to the company, weRead will make buying online more social as it will “leverage advanced recommendation technologies and social graph information to enhance customer experience.” 

Bansal explains, “Many people depend on their friends’ recommendations before making a purchase online and as the weRead application is available across all popular social network sites such as Facebook, Orkut, Yahoo, MySpace and Hi5, we can capture user-generated information such as who, within an individual’s social network, has marked a book as favourite, or has written a detailed review and provided user ratings of books. Eventually, this information will enable our users to decide their purchases based on their social graph’s recommendations. This will help make buying online at Flipkart a more holistic experience, right from purchase to referring or recommending ones favourite books to all those within their network.”


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17 Comments
Sn . 5 years ago

good luck to general atlantic ! it’s soon becoming a fool finding bigger fool investment theme…$ 1 bn valuation for few cr rupees turnover company…now this is perfect recipe fr e-commerce bubble….

SAS . 5 years ago

This is not right. A company being valued 50 times its revenues is plain stupid. I sincerely hope somebody brings sanity into the system. Flipkart looks like a scapegoat for the investor community to do their insider dealings. I bet the promoters hardly have a say in this. GA has not closed a deal in the last 4 years and now this one. Sad!

iimb . 5 years ago

I buy my stake at 5 Rs and spend rest of my time ensuring i sell for at least 10 or 100 times more. That’s my focus – forget what the customers get, or even if I am profitable or running a single margin business. Hype my friend creates buzz and buzz creates valuation. we are headed for a great ride.

Rajan . 5 years ago

This is a perfect example of another dot-com bubble in the making. More than 200 Million USD has been poured into the sector this year alone. VC’s are solely responsible for this to create all the hype and play with LP’s money for quick & fancy returns. Reality will bite someday when Flipkart goes for an IPO when there would be no public takers for such a speculated company.

Chirag Jobanputra . 5 years ago

Great going Flipkart, I do not see this speculating, they have strong business model, great customer service and a big playground to play. Is there any other company in India growing as fast as flipkart, the answer is ‘None’.

Joker . 5 years ago

Hmm, do I see a green tinge of envy in the comments by IIM folks about a company started by plain IIT grads? Mark Zuckerberg was also no MBA either -look at him and well, go have fun trying to start your own company.

Chirag . 5 years ago

1 billion? What is wrong with everyone?

On an interesting note see this.

http://traffic.alexa.com/graph?&w=400&h=220&o=f&c=1&y=t&b=ffffff&n=666666&r=5y&u=rediff.com&

Siddharth . 5 years ago

The 1 billion valuation will not seem stupid after 4-5 years. These guys have virtually no competition, and to create a supply chain (which is the biggest bottle neck here) any competitor will have to struggle a lot. Frankly, Crossword could have tried to do this, but they couldn’t take off and remain a side business.

Pankaj . 5 years ago

I am scratching my head. The largest airline in India, Jet Airways with 97 aircraft has a market cap of $850 million and of all the 5000 listed companies in India only about 150-200 have a market cap of $1 billion or more…..

sachin . 5 years ago

what do you guys say about starting a online shopping portal, how an new entrant compete with the existing player.

Varma . 5 years ago

Flipkart’s revenues are less than $5 M. Laymen confuse their turnover or what is known as gross merchandise value as revenues. In retail or ecommerce, you should actually count only their net revenues which is at best only 10% of the turnover. Using this as a basis, the valuation multiple is 200 times revenues. The same is the case with the news on Snapdeal earlier. If this is not a bubble, i don’t know what else is.

SL . 5 years ago

At the outset, this does look like a stretched valuation. However, as always, the devil is(may be) in the details. Unless the term sheet of GA is seen, its difficult to take a call since no one knows if this is a single tranche investment, milestone based or has some other riders.

However, on the business model front, I have reservation on sustainability. This deal may be betting more on the customer database and cross-selling opportunities rather than plain Flipkart revenues. Only time will tell.

SN . 5 years ago

deals like these make the LPs in developed nations stand up n say Indian companies are very expensive n rush to China where valuations are reasonable enough to give LPs good returns…what is so unique abt supply chain management of flipkart tht warrants USD 1 bn price..expensive deals turn off LPs in a very big way something which promoters dont understand….curious to follow the fortunes of exit of this deal….CROSSWORD never tried to make onlinesales as core strength and its supply chain is robust….every investor in sees future makemytrip in their investment and fool NASDAQ….BSE / NSE will nt even give a glance on such companies…

FK Rocks . 5 years ago

Dont knw wht the fuss is all about. Facebook is valued at 100 billion. Its just not about today alone its about what the company can achive over a period of time. All you IIMB straight coats can learn a lot from FK, its not all hit and run. The 3G spectrum has been auctioned for 50K Crores, the way companies can get a ROI is by investing on e-commerce. By 2015 india’s online penetration is set to cross the population of the US, think this is an investment for the future.

PS – FK ppl if you reading this comment, dont sell the bussiness to Amazon tell Amazon how things are done here!! All the best!

OWL WATCH . 5 years ago

@Varma – Absolutely right.

Few have understood that FK is a Rs. 20-25 Crs LOSS making company; and the company is getting valued at over 200times revenue. The important part to note is that – assuming the @150mn is a fully primary, bullet investment round – in the current year FK will have greater earnings from other income than business income!

FK’s stated approach of building its own delivery & cash-collect workforce is an interesting twist to an “e-commerce” model. In principal it follows the local kirana store approach of free home delivery/cash-pickup model. Will this be a pan-India scalable model. We will have to wait and watch. 150mn will go a long way in building a DSA model. Will then FK option of acting as the courier / delivery network for financial services sector too – and can become an alternate source of revenue.

Nothing “e” about their business!

360buy in China is (over)valued at $10bn at a time when they have ‘sales’ of about USD 4bn. Like-to-like for a 50mn projected sales FK should have been (over) valued atbest at $100-125Mn.

Anyone know if the founders cashed out in this round?

MM . 5 years ago

I don’t belive it 🙂

sachiv mehta . 5 years ago

FK’s present T/O is around 100 Crores. Assuming there optimistic NP of 10% now, they make 10 Cr i.e. 2.5 Mn USD. Estimating more agreesive and over optimistc 100% compounding growth for next 5 Years in sales and NO, they should reach 80 Mn USD in the 5th year. Cummulative should be at 155 Mn USD.

A Billion $ valuation now alone will earn a cumulative interest @ just 5% will earn 276 Mn USD. Almost double the size of their cumulative over optimistic earnings.

there is no guarantee that other healthy competitors like TV18 or BIG (ADA) or Times will enter in this apparantely lucrative business and puncture the above assumptions. Also, the economic conditions also play dominating role in arithematic growth I assumed above.

So how can this 1 bn $ valuation be justified ?

well, the VCs are nothing but the toutes for the stupid and greedy foreign investors and entire holding of these Vcs will be landed into this stupids’ kitty for the rest of their life and will bear the same position they experience in case of Amazon’s share, world’s once costliest company. Well above opinion is with due respect to Flipkart which offers excellent buying experience and unmatched service.

Sachiv

Flipkart Buys Social Book Discovery Tool WeRead

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