E-commerce battle in India has suddenly taken a new turn as rumors of World’s #1 retail company Walmart entering into the arena has set the market abuzz.
As per reports coming in, though unconfirmed, Walmart is all set to invest $1 billion into Flipkart and acquire a minority stake in India’s biggest ecommerce portal. This will mark Walmart’s re-entry into the consumer ecommerce business, after their partnership with Bharti fell off.
And, this will also mark a new partnership between Flipkart and Walmart, which has been deliberately formed to take on world’s biggest ecommerce firm Amazon.
Now, the question is, can joined forces of Walmart and Flipkart defeat Amazon in India?
And what would be the role of Alibaba in this whole game?
Walmart’s Aggressive Push Into India – The Flipkart Way
As per unconfirmed reports surfacing in some news portals, Walmart is right now amidst advanced talks to acquire a minority stake in Flipkart by infusing $1 billion of capital. The investment is likely to be conducted at Flipkart’s latest valuation of $16 billion.
Both Walmart and Flipkart has denied this speculation.
Walmart spokesperson said, “As a policy, we don’t comment on speculative reports,”
Whereas Flipkart spokesperson informed: “It is our policy not to comment on rumours or speculations.”
As per unnamed persons who are close to this speculative deal, representatives from both Walmart and Flipkart are right now having advanced talks, and work out the formalities of the deal.
Another report states that the arrangement of investment would be made similar to that of Walmart’s recent investment in China’s 2nd largest ecommerce firm JD.com. Walmart invested $1.5 billion to acquire 5% stake in JD.com, and thereby smoothly entered the lucrative Chinese market where they didn’t had any stake earlier.
In case Walmart invests $1 billion into Flipkart, then at a valuation of $16 billion, Walmart can acquire 6.25% stake in the venture. Details are not yet clear, as the market is speculating the possibilities.
How Can Indian Ecommerce Change By Walmart’s Entry?
Walmart is world’s largest retailer, and had entered India in 2007 when they partnered with Bharti Retail to open retail stores. The partnership proved to be a failure, as Walmart reportedly paid $334 million to Bharti to buy out their stake. Since then, they have gone solo in Indian B2B market, and operate 21 odd wholesale stores across India.
Considering that 100% FDI is not allowed in B2C segment, but investments are allowed in the ecommerce marketplaces, Walmart is looking to make a dent in the fast growing Indian ecommerce market via their investment in Flipkart, which has already 100 million customers.
On the other hand, Amazon and Walmart was pitched in a fierce battle of supremacy in US, which has now spilled over to India as well.
Reports are coming in, that the partnership between Flipkart and Walmart will not be simply financial; it will be strategic as well. This way, Walmart can leverage Flipkart’s dominance in online fashion niche, and it’s massive volume of transactions. And Flipkart can use Walmart’s capital, expertise and retail experience to churn out a new path of growth and market dominance.
Next move from Alibaba and Amazon would be closely watched in India, as their next decision will eventually decide the outcome of this ecommerce war in India.