U.S. retailer Walmart is looking to buy more than 40 percent stakes in India’s largest e-commerce firm, Flipkart. If sources are to be believed, Walmart may buy existing as well as new shares and Flipkart would be valued at more than $12 billion.
This move could be a way to beat competition from Amazon which is investing $5 billion in India and is also venturing into online grocery delivery- the “next big thing” in the e-commerce services.
One source added, “As large as they are, Amazon has eaten away a significant chunk of their revenues and I think… they view India as the largest market possibly for this (taking on Amazon).”
Walmart presently has 21 stores in the country and has been trying to establish itself in India for years but has been restricted to wholesale business due to restraints on foreign investments. The deal with Flipkart comes after Amazon has expanded into offline retail.
For Flipkart, a deal with the U.S. retailer would give it a boost against Amazon. Founded in the year 2007 by Sachin Bansal and Binny Bansal, the e-commerce giant owns Myntra and Jabong – two fashion portals. The two are former Amazon employees and like Jeff Bezos, started out by selling books. They now compete with Amazon in all product segments.
The research firm Forrester estimated that Flipkart owns approximately 40 percent of India’s online retail which is way ahead of Amazon.
“Walmart’s expertise in selling groceries and low-cost apparel could help Flipkart remain ahead in India’s e-commerce market,” said Satish Meena, senior analyst at Forrester.
While a representative for Walmart in India refused to comment on the matter, a spokesperson from Flipkart said that the company does not comment on rumors or speculation.