To fight competition from Amazon, Flipkart likely to buy eBay's operation in India

Since its launch in 2004, US firm ebay has been underperforming in India and has been unable to take on its competition.

The country's e-commerce giant Flipkart is reportedly said to be in talks to acquire eBay's India operations in an all cashless deal.

According to media reports, US-based eBay is likely to invest $500 million in Flipkart. This deal would be part of a $1.5-2 billion funding round, out of which Flipkart has already secured $1 billion through Chinese firm Tencent and Microsoft.

Since its launch in 2004, US firm ebay has been underperforming in India and has been unable to take on its competition.

The online auction portal also reported losses of Rs 262 crore for the year ended March 2016 in comprison to Rs 172 crore in 2015.

Recently, eBay India head Latif Nathani was been replaced by Vidmay Naini. If all goes well, ebay India operation will soon be merged with Flipkart after the deal.

Flipkart's sky-high valuations was marked down several times last year. In November 2016, Morgan Stanley marked down Flipkart's valuation - for the fourth time in a year - to $5.6 billion. Last year, Flipkart was devalued by Morgan Stanley at about $5.5 billion compared to the $15.2 billion it was valued at in May 2015.

Also, there were management changes with Flipkart's biggest investor Tiger Global Management appointing former eBay executive Kalyan Krishnamurthy to help turn around India's most valuable internet startup.

Till then, the founders, Sachin Bansal and Binny Bansal had a largely free hand. With Amazon India's insatiable appetite for spending money to expand, investors in Flipkart became more cautious.

There was a mass exodus of senior leadership from Flipkart, followed by a quest on how to fill the gap and what the new leadership structure should be like. It took 3-4 months for Flipkart to fix the internal organization and associated strategies and they practically lost this time to do anything significant around growth.