BookMyShow looks for Flipkart's backing to combat Alibaba
Amid competition from deep-pocketed global players like Alibaba, India’s leading online ticketing platform BookMyShow is looking for a backing in its space from Flipkart, the country’s largest internet company.
While BookMyShow has been one of the few profitable internet companies in India, with a profit of Rs 3.1 crore on a revenue of Rs 248 crore in the year that ended March 2016, competition from rivals like Paytm has caused sales growth to slow.
To shield itself from cash-burning rivals, BookMyShow will sell a minority stake to Flipkart, a behemoth with a cash reserve of $4 billion. For the e-commerce major, a stake in BookMyShow will give it a play in the fast-growing online ticketing space and also an access to a high-spending loyal customer base
According to Livemint, which reported the story first on Monday, Flipkart is interested in outright ownership of BookMyShow, but talks have largely steered towards purchase of a minority stake in the company.
Both companies have a common investor in Accel Partners, one of the oldest and reputed early-stage VCs in the country.
Flipkart has been an active investor in other internet businesses and its acquisitions like Myntra, Jabong and PhonePe have borne fruit. Myntra says it will become profitable at an earnings before interest, tax, depreciation and amortisation (Ebitda) level by March 2018, while PhonePe says it is the largest digital payments player on UPI.
While Flipkart is looking at categories like groceries to get customers to buy from it more often, the model will take time and significant investments over the next few years. On the other hand, online ticketing, already an established market in India, will give Flipkart the desired repeated purchases on its platform.
An investment in BookMyShow can lead to partnerships where Flipkart sells movie tickets on its platform, bringing a group of loyal customers on to its platform a few times a year. For BookMyShow, the 100 million claimed customers on Flipkart’s platform are all potential customers, giving the company access to all of them.
Paytm, which realised the importance of having repeat buyers through its offering of mobile mobile recharges, stepped into the online ticketing space since the market is far more high-value.
The company has acquired a majority stake in online events ticketing platform Insider.com for Rs 35 crore, adding to its own efforts of reaching out to theatres across the country to sell their movie tickets.