Well, this went as speculated, the rumors were true on the most part. Walmart made the biggest ever deal in e-commerce industry by acquiring Flipkart for $16 billion. This acquisition gives Walmart 77% stake in Flipkart.
Walmart is an expert in physical retail but has been struggling in online business. To tackle this, it bought Jet.com (US e-commerce site) in 2016 for $3.3 billion. And to further compete with Amazon and to grow Walmart’s online presence, it bought Flipkart. India is the 2nd most populated country and with its rapidly growing online audience, both Amazon, and Walmart were eyeing to establish itself in India.
Amazon owns approx 33% of Indian e-commerce market since its entry in 2013. But Flipkart was already big in India and still managed to scale up to 43% market share despite of Amazon’s tough competition. This acquisition gives Walmart a big headstart in this rapidly growing economy.
Walmart has an ambitious plan to not only win against Amazon but also to use Flipkart as a base to dominate e-commerce all over the world.
“At Walmart, we’re learning how to build — and how to partner to build — retail ecosystems around the world. India will now become a key center of learning for our entire company,”-Walmart CEO Doug McMillon said on a call with analysts following the announcement of the deal.
“Not only is Flipkart innovative with the problem-solving culture that they have, but they are doing some great work both in the AI space, how they are using data across their platforms but particularly in terms of the payment platform that they’ve created through PhonePe. All of those things we can learn from for the future and see how we can leverage those around the international markets and potentially into the US as well” Judith McKenna, Walmart COO, said on the call.
Walmart now owns 77% of Flipkart and the rest 33% is owned by Tencent, Tiger Global, Microsoft, and Flipkart co-founder Binny Bansal.