Walmart to soon announce its Flipkart deal in India

Posted May 11, 2018

According to global research and analyst firm Forrester, India's e-commerce sector hit $19.2 billion in sales in 2017 and is expected to grow to $73 billion by 2022, at a compound annual growth rate of 30.62 per cent.

Sources close to the matter claim that Amazon India is already busy chalking extensive plans on how to combat the rejuvenated Flipkart post Walmart deal. Walmart will be able to access Flipkart's loyal customer base, a well-established e-tailing delivery system and benefit from its learning of being a category creator in India.

Indian retail's deal counter will keep buzzing.

Walmart will retain Flipkart's management led by co-founder Binny Bansal and CEO Kalyan Krishnamurthy.

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Walmart now operates 21 cash-and-carry wholesale stores in India, serving small businesses, after entering the country in 2009 through a joint venture with an Indian firm. Amazon also faces stiff competition in China from Alibaba and JD.com.

Walmart said Flipkart's logistics, payments and apparel businesses offer new areas of growth.

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In a lesser but apparent win, Tiger should also see a return on its investment in Glassdoor, the jobs and salary website that announced yesterday it is being acquired by the Japanese human resources company Recruit Holdings for $1.2 billion in cash.

During a recent investor call, Amazon CFO Brian Olsavsky had said the company would continue to invest in India as it sees?great progress? with both sellers and customers here, even though as the United States e-tailing giant had registered a loss of Dollars 622 million from global operations in the first quarter of 2018.

Last year, Flipkart group raised $1.4 billion from global technology majors eBay, Tencent and Microsoft.

But the size of Walmart's Flipkart deal, about five times what it paid in 2016 for jet.com, and the uncertainty of the impact on Walmart's profitability discomfited investors.

Many experts claim that with Flipkart's stellar success, Bhansals have their names in golden words in India's entrepreneurial history.

How does the Flipkart buyout help the Indian start-up ecosystem? "Such transactions will also increase the confidence of many large and strategic investors eyeing Indian startups for investment". Although Flipkart is now the market leader, Amazon's Indian site, which only launched in 2013, is catching up quickly. This is an extension of Walmart's global expansion strategy. Amazon needs to succeed in another high-growth market to prove it can effectively replicate its model beyond North America, and it has been aggressively expanding in India. The return on that investment will now be among the largest that the group's $11 billion venture unit has seen, reports the outlet.

Meanwhile, Amazon founder Jeff Bezos has committed investments to the tune of $5 billion for the Indian market.

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