Things have changed dramatically in the Indian e-commerce industry since 2009 when the total volume of the market was less than $50 million and the modern supermarkets were still trying to become stable business models.
While Amazon.com was still far away from even considering investments and business in India and Walmart had just one wholesale outlet in partnership with Bharti Enterprises then. And Flipkart, India’s first indigenous e-retailing firm had opened up just two years prior to 2009 as an online seller of books and was little known in the market.
And compared to that period, just a decade later, Amazon is very active in India and Walmart – the largest brick and mortar firm in the world, is in advanced talks with Flipkart to invest several billions of dollars in the Indian e-commerce market. this has brought the Amazon Walmart fight to Indian shores.
According to reports, Amazon is also in talks to acquire its major rival Flipkart in India. reports suggest that a bid to buy off Flipkart could soon be placed by the largest e-retailer in the world. However, Walmart is also eyeing the same company.
While Flipkart has been able to establish the Indian e-commerce industry, the Walmart investment in Flipkart has the potential to take the Indian e-commerce market to the next level. It could be placed at the same levels of Amazon and China’s Alibaba.
In case Walmart manages to get its deal with Flipkart through, it would likely be at least a decade before the battle between Amazon and Flipkart could come to an end. With the two of the most deep pocketed companies in the world, that battle would have stake several billions of dollars. As investments.
However, if Amazon is able to acquire Flipkart, it would make the new entity the clearly undisputed number 1 e-retailer in the Indian market.
This is not he first time that Flipkart has held talks about investments with Walmart. It was back in 2016, Flipkart had reportedly approached Walmart for investments as the Indian company was finding it hard to fight the deep pockets of Amazon in the Indian market. While those talks failed, Walmart always had an eye on the Indian e-retailer especially after Flipkart managed to get huge investments from investors led by SoftBank, China’s Tencent Holdings, Microsoft and eBay of nearly $3 billion. in comparison, in the years since it inception, the company had been able to generate about $6 billion in total.
It was late last year that talks between Walmart and Flipkart resumed again and included important players like Tiger’s Fixel and top notch of both the companies. If reports are to be believed, a visit in recent week to the headquarters of Walmart was made by Fixel which is also the biggest backer of Flipkart and an important board member. Similar visits to the headquarters of Flipkart in Bengaluru in India have been made by top Walmart officials in March this year.
It is being reported that Walmart could make strike a deal with Flipkart to take up a sizable stake at the e-retailer which could value the Indian company anywhere between $20 billion and $23 billion. the rumored stake is 51%. A complete acquisition appears to be unlikely because investors in Flipkart, including SoftBank, are reportedly not wiling to exit the company yet.
Walmart does not have a large presence in the Indian market except 21 Best Price wholesale stores. It has kept itself away from retailing because of impediments to foreign direct investment in single brand retail earlier. Very recently, the Indian government has eliminated those restrictions making it easier for Walmart to enter the Indian market directly in the big way.
And if Walmart pulls off the deal with Flipkart, it will pit the retailer with Amazon in the Indian market just as they are competing in the U.S. market.
“If the deal (between Walmart and Flipkart) does go through, it levels the playing field considerably, from a global perspective. While in India, Flipkart is a massive name, Amazon, which has been around for over two decades, has far greater experience in the e-commerce business and has several billions of dollars at its disposal that it can keep deploying towards India through the next decade or so,” said Harminder Sahni, founder and managing director of retail consultant Wazir Advisors.
According to Haminder Sahni, founder and managing director of Wazir Advisors, a retail consultant, it would be interesting to see the Walmart vs Amazon battel in India because both the companies have huge experience in the retail business.
“Amazon wouldn’t have been caught off guard by Walmart’s potential entry into India—it is a situation they would have anticipated when they first entered India back in 2013,” said Sahni.
(Adapted from Livemint.com)