Walmart, an American Multinational retail corporation, once started in a warehouse, has over 11,718 stores in 28 different countries in the world and is further trying to expand its reach by investing in India’s leading e-commerce platform ‘Flipkart’. It is speculated that Walmart is willing to spend about USD 7bn in the deal and this investment would value India’s e-commerce firm somewhere between USD 20bn to USD 20bn.
According to experts, the deal may involve primary and secondary sales by some long standing investors. If the deal is finalized, it would put Walmart against Amazon thus mirroring a rivalry between the two.
Walmart is keen on buying one-third of the share of Flipkart Online Services Pvt. by buying the stakes from its biggest shareholder Softbank Group Corp. But some reports have suggested that Softbank Group Corp. is opposed to the sale as it is not ready to cash out so early because they see themselves as a long-term investor in Flipkart. However, the other key investor Tiger Global is happy to sell some of its position in the company. The negotiations and terms are still under consideration and if everything gets sorted, the deal could possibly be signed later in the month of March.
It is speculated that this deal will give Walmart a major stake in the Indian e-commerce giant that has a market or consumer base of 1.3 billion people. Undoubtedly, Walmart is the number one retailer in the world but with the advancement in technology and shift of consumer’s to the online marketplaces, it has always struggled against Amazon. This is why the investment deal will be a sort of tiff between Amazon and Walmart.
Price and size of the stake is still liable to change. According to experts, Walmart is expected to invest in Flipkart as well as buy shares from its already existing partners or investors including Naspers. The deal could help Flipkart in giving it a push in the grocery sector, a sector where 100% FDI is allowed, online as well as offline. This can prove as a win-win situation for all the stakeholders involved, starting from farmers to consumers. If the deal is signed, it would be the biggest in the nascent history of the world of Indian e-commerce.
It is well known by now that there is a stiff competition between Amazon India and Flipkart in the Indian market. A similar competition exists between Walmart and Amazon in the U.S. market. If the two companies, Walmart and Flipkart, sign the deal then Walmart will be able to retain its position in its primary niche in US and will fight head-on with Amazon.