I find people's (especially Indian's) puzzled reaction to news about flipkart's funding puzzling. Flipkart has altered the online buying habits of urban Indians significantly. I would be surprised to meet an urban Indian today who has not heard about flipkart. By urban I mean the tier 2-3 cities as well. So is it just the fact that the current revenue numbers do not add up that makes it puzzling to some (most??) ? If I was an investor, I'd bet on flipkart, solely based on watching the change in spending habits of the urban Indians over the last 5 years. Instead on narrowly focusing on the online business if you take a broad look at the way things are changing the tier 2/3 cities in India you'll understand the investor optimism. You mentioned:

  > Unlike USA, India has not yet figured out how to build proper usable roads,
  > the cities are not planned and India does not have a proper addressing
  > system. Government regulations have further made life difficult for courier
  > companies. All this has resulted into cities and towns where traveling over
  > few kms is very expensive and time consuming as a result small shops
  > catering to need of local communities have sprung up like mushrooms.

...but like almost any other success story in India, flipkart has become a recognizable brand despite this !! ...isn't that reason enough to undestand why the investors feel like this is going to be worth it ?