Bangalore: Retailing giant Walmart that has failed to expand in India despite its intent due to multiple reasons is all set to buy minority stakes in leading India e-tailer Flipkart. If that happens, Walmart vs Amazon competition will come to India. And for consumers, it will be a great proposition.
Amazon has poured in billions of dollars in its Indian arm, Amazon.in and is giving tough competition to India’s leading e-commerce platform Flipkart. To be true there are indications that this year, Amazon will beat Flipkart in terms of merchandise sold and on many other parameters.
In the meantime a latest report suggests that Walmart is in serious talks with Bangalore based Flipkart to pick up a minority stake in the e-tailer.
Nonetheless thus far neither Bentonville-headquartered Walmart nor Sachin Bansal and Binny Bansal-founded Flipkart commented on the issue, a source said it may not make much sense for the American brick-and-mortar giant, with significant online ambition, to pick a minority stake in Flipkart at the valuation it commands.
Flipkart is facing some issues in recent months. It had to face flack from IIT for not being able to give joining dates to some students whom it had selected from campus placement. The Bengaluru-based company had past estimated its own value at over $15 billion last year, but many of its investors have marked down the worth since then. Even after the markdowns, which are theoretical, Flipkart is valued at $10-$11 billion.
In the meantime a source said, “A minority stake in Flipkart will not give Walmart any substantial play in the online space, while paying a big price for it”. The talks between the two could be for other strategic tie-ups, rather than a stake deal, another source said. Walmart has been in negotiations with several e-commerce companies, including Shopclues and Snapdeal, for presence across online platforms. However, many analysts have pointed out that there’s a reason for Walmart to gain traction in the online market in India.
Walmart is in a hurry to enter India given the expanding international footprints in India’s online retail market. The biggest trigger is Chinese online major Alibaba finalising its direct India foray. In fact, in China, Walmart invested $1.5 billion to pick up a 5 per cent stake in JD.com, or Jingdong Mall, formerly 360buy, to compete with Alibaba. Amazon, which has been investing heavily in India – $5 billion committed in the last three years – is a natural rival since Walmart has been trying hard to take on Bezos’ company in the home market. It must be kept in mind that Walmart is spending huge amount in the US to improve its online standing.