NEW DELHI — A $700 million investment in India’s largest e-tailer Flipkart has upped the stakes in the country’s fast-growing e-commerce segment.

This story first appeared in the December 24, 2014 issue of WWD. Subscribe Today.

Flipkart, now valued at $11 billion, up from the $7 billion evaluation in July, is racing past the valuation of many brick-and-mortar retailers and department store chains such as Shoppers Stop, Lifestyle and Westside.

E-commerce, still less than 1 percent of the total Indian retail market of $500 billion, is expected to reinvent itself within the next three years and grow by more than five times by 2017.

Flipkart, which has maintained its lead as the biggest player in Indian e-commerce, hit $1 billion in sales in March, a year ahead of its own estimates. The company raised $1.2 billion this year and has been staying ahead of the game, even as global e-tailers Amazon and eBay have strengthened their positions in the market. With the acquisition of fashion e-tailer Myntra earlier this year, Flipkart also has taken a lead in apparel.

The latest $700 million in investment came from new investors Steadview Capital, Greenoaks Capital and Qatar Investment Authority, as well as earlier investors DST Global, ICONIQ Capital and Tiger Global. A spokesperson for Flipkart said the funds would be used to keep it a “world-class company with cutting-edge technology.”

Flipkart also has applied to become a public company, as it has more than 50 shareholders. The application has been made in its home base of Singapore.

Given that there has been no real precedent for e-commerce in India, Flipkart has been charting its own path, sometimes emulating Western successes. In October, as the festive season in India began, Flipkart revealed its “big billion day sale,” the most ambitious discount sale on the Indian market, based on the idea of Black Friday in the U.S. “We got a billion hits,” said Flipkart cofounders Sachin Bansal and Binny Bansal after the event.

They also had sales of $100 million over a 10-hour time span on that day, changing the stakes of the entire retail segment, given the ability to pull in more than many retailers’ annual revenues. More than 500,000 pieces of apparel and shoes were sold and the same number of mobile phones — electronics were a big winner.

Both Amazon and Snapdeal said their sales also were considerably higher than on previous days, partially because demand was so great that Flipkart’s servers crashed. This left many consumers peeved, as did the “sold out” signs that greeted them when they clicked on many products during the first hour of the sale.

Flipkart management apologized the next day for the failures, despite which the realm of possibility in Indian e-commerce had been extended. The company is expected to push these boundaries even further with the new investment.

Myntra, which has kept its lead as the biggest fashion portal, also has been launching innovative strategies to stay ahead, including a fashion weekend in collaboration with IMG-Reliance, the joint venture that hosts Lakmé Fashion Week twice a year in Mumbai, along with beauty brand Lakmé. The first such fashion weekend held in October and targeted at customers instead of buyers and the media was declared a successful prototype for future expansion.

Myntra has been linking with global designers and brands to launch in the Indian market, as well as developing its own private labels.

The latest investment in Flipkart is only the latest cash infusion into Indian e-commerce this year.

In October, Amazon chairman, president and chief operating officer Jeffrey P. Bezos spent an entire week in India. He made good on an earlier commitment to invest $2 billion in the country, handing over a check for the amount. Bezos noted that India is one of the company’s fastest-growing markets, on track to touch $1 billion in sales by next year, despite only having launched in India in 2013. Amazon follows a marketplace model in India as foreign direct investment in e-commerce is not permitted by the Indian government.

Snapdeal, another e-tailer that counts eBay as one of its investors, raised $627 million in October.

According to a report by the Internet & Mobile Association of India (IAMAI) and IMRB International, the number of Internet users in India is expected to grow 32 percent this month to 302 million. This is up from 213 million in December 2013, and estimated to further grow to 354 million by June 2015.

“The Internet in India took more than a decade to move from 10 million to 100 million [users] and three years from 100 million to 200 million. However, it took only a year to move from 200 to 300 million users. Clearly, Internet is mainstream in India today,” IAMAI-IMRB said.

This is expected to change India’s position from the third-largest Internet user base in the world and enable it to surpass the U.S., which has 279 million users. The country would, however, remain far behind China, which has an estimated 600 million Internet users, according to the report.

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