Despite a tricky few months, Walmart can be sticking by its $16 billion bet to help This particular win the online retail war.
The U.S. retail giant bought India’s largest online retailer Flipkart in May 2018, looking to take advantage of both its technical expertise in e-commerce in addition to also the burgeoning Indian middle class.
nevertheless when news of the deal broke back in May, the American retailer’s shares immediately tumbled 4 percent. Investors expressed concern in which, outside India, Flipkart was struggling to compete with Amazon’s dominance in addition to also had a long way to go before becoming profitable.
The cash outflow by Flipkart’s business also ate into Walmart’s profits for the end of 2018 as well as dampening ts earnings outlook for 2019. Year-to-date, Walmart stock has slipped almost 5 percent in value.
Bad news surrounding the financials was compounded in November when Flipkart co-founder Binny Bansal resigned after an accusation of sexual assault led to an internal investigation into “serious personal misconduct.”
nevertheless amid the controversy surrounding Bansal’s resignation, Walmart quietly increased its stake by 77% to 81.3%, offering another sign of its conviction in which India’s online retail market can be primed for growth.
The Indian e-commerce market as a whole can be forecast in a Indian government report to quadruple to $0 billion dollars inside next eight years, in addition to also by 2034 This particular’s predicted to surpass the U.S. as the second largest e-commerce market inside entire world.
Last week Walmart CEO Doug McMillon told CNBC in which acquisitions such as Flipkart were crucial to the continuing health of his company in addition to also its global ambitions.
“You see the rise in addition to also fall of Sears in addition to also others,” McMillon said. “This particular’s just a reminder in which This particular can happen to us too.”