Walmart & Flipkart To Open Retail Stores In India; Amazon Should Be Worried!
Walmart and Amazon are fierce rivals on their home turf. If the Flipkart-Walmart deal goes through, they could soon be facing-off in India as well.
The Indian e-commerce space is becoming fiercely competitive day after day, and it is looks to intensify further, as reports came in that Walmart is in talks with Flipkart to acquire around 30-35 percent stake in the homegrown company.
If everything goes right, the deal would become one of the biggest overseas deals in the world, as Walmart is looking to buying new and existing shares in Flipkart. As per the sources, the due diligence is likely to begin as early as next week.
Flipkart, Walmart & Amazon
The deal with Walmart will give Flipkart much-needed oxygen to fight against Amazon India, where world’s richest man and owner Jeff Bezos has committed to invest $5 billion in India as it plans to expand aggressively in the online space including its online grocery deliveries and retail store business. India is Amazon’s biggest market outside its home market in the US.
At present, Flipkart controls nearly 40 percent of India’s online retail and is ahead of Amazon India.
If Walmart partners with Flipkart for retail business in India, it will allow Flipkart to forge a stronger offline presence, just as its closest rival Amazon entered the food retail business and became the first foreign company to start a food retail venture in the country.
How Will The Deal Help Flipkart & Walmart?
Walmart’s investment in India’s largest online marketplace will open another global front in its battle against Amazon. Walmart cannot directly open its stores in the country because of the restrictions on overseas investments in a multi-brand retail. As for Flipkart, the company has been trying to foray into offline business with retail stores for a long time now.
The partnership between Flipkart and Walmart will help Flipkart to boost its online retail business and will make way for Walmart to enter the grocery and consumer goods business in India. Walmart already owns 21 business-to-business wholesale stores in the country.
The purchases of grocery and consumer goods on Flipkart will be handled by Walmart’s wholesale stores, and a retail store partnership will allow Flipkart’s customers to order online and options to buy from the stores at the same time.
The US-based retail giant is planning to negotiate for more than a 30 percent stake, but will probably get 20 percent stake because of objections from Flipkart’s other major investor SoftBank, which holds a 20.8 percent stake in the homegrown e-commerce company.
Flipkart recently became world’s third most private funded startup where Tencent led a $1.4-billion investment in Flipkart with Microsoft and eBay in April, followed by Japan’s SoftBank, who invested $2.5 billion in Flipkart in August last year.
Why Amazon May Have A Hard Time
Walmart continues to be Amazon’s biggest rival in its home market and as well as major overseas markets. Back in India, Amazon’s biggest competition is Flipkart, and the new Flipkart-Walmart deal could affect Amazon.
With Amazon entering the food retail segment in India, the company will now sell locally made and packaged food to its customers directly and will compete with some of the leading online grocery and food retail marketplaces like Grofers, Bigbasket and Supr Daily. But with Flipkart and Walmart in the process of joining the retail forces, it will give Amazon India a hard time, both online and offline.
The proposed investment from Walmart in Flipkart will help the Indian e-commerce company to expand into the consumers’ goods delivery market and Walmart, at the same time, can benefit by entering the online retail business with a larger footprint in the country!