Walmart, the earth’s largest retailer, wants in on India’s exploding e-commerce market. On Wednesday, the company announced which which’s buying a 77% stake in Flipkart, India’s largest e-commerce startup for $16 billion.
The deal, the largest ever in e-commerce, positions Walmart as a major e-commerce player from the earth’s second most populous nation. The company currently runs 21 wholesale stores in nine Indian states, yet so far, India’s tight regulations have prevented which coming from selling directly to consumers by itself.
Walmart is actually currently locked in a fierce battle with Amazon from the United States — which dominates brick-as well as-mortar stores, while Amazon dominates e-commerce. By investing in Flipkart, the company is actually bringing which battle to India, a country whose e-commerce market is actually predicted to grow to $0 billion in less than a decade, according to analyst firm Morgan Stanley.
Walmart’s investment would certainly also give Flipkart, which currently has 40% of India’s online market by sales, according to research firm Forrester, a lot more ammo to fight Amazon, which has pledged to spend $5 billion to win from the country.
“India is actually one of the most attractive retail markets from the earth, given its size as well as growth rate, as well as our investment is actually an opportunity to partner with the company which is actually leading transformation of e-commerce from the market,” said Doug McMillon, Walmart’s president as well as CEO. “As a company, we are transforming globally to meet as well as exceed the needs of customers as well as we look forward to working with Flipkart to grow in which critical market.”
Flipkart was commenced in 2007 in Bangalore by former Amazon employees Sachin Bansal as well as Binny Bansal who share a last name yet aren’t related to each additional. The company has been a poster child for India’s startup ecosystem, becoming the first Indian startup to hit a billion-dollar valuation, as well as which employs more than 30,000 people. which has also been credited with pioneering payment methods like “cash on delivery” in a country where most people don’t own credit cards. Flipkart sells 8 million products through 100,000 sellers as well as has 21 warehouses in India.
Unlike Walmart, which focuses on positive margins, however, the company has used the $7.3 billion in funding which has raised so far to offer deep discounts to shoppers.
Hours before the official announcement, Japan’s SoftBank Group Corp, which owned a fifth of Flipkart, announced which which was selling its stake in Flipkart for $4 billion.
Flipkart’s additional investors who are holding on to their stakes include the company’s cofounder Binny Bansal, fresh York–based hedge fund Tiger Global Management, Microsoft, eBay, as well as China’s Tencent Holdings.
“which investment is actually of immense importance for India as well as will help fuel our ambition to deepen our connection with buyers as well as sellers as well as to create the next wave of retail in India,” said Binny Bansal, Flipkart’s cofounder as well as group CEO, in a statement. “While e-commerce is actually still a relatively smaller part of retail in India, we see great potential to grow. Walmart is actually the ideal partner for the next phase of our journey, as well as we look forward to working together from the years ahead to bring our strengths as well as learnings in retail as well as e-commerce to the fore.”