Walmart to invest in India's Flipkart

Walmart to invest in India's Flipkart

Walmart to invest in India's Flipkart

The Seattle-based firm has struggled to duplicate its North American success overseas in the face of stiff competition from local outfits such as Flipkart and China's Alibaba who have had far longer to build out their logistics networks and tailor their offerings to customers far removed from - and far less enamored with - the power of Amazon's not-quite-global brand, which saw losses on its worldwide operations more than double in 2017 to US$ 3 billion, compared to US$ 1.3 billion from the year previous.

Its investment will include $2 billion of new equity funding and the company said it remains in talks with other potential investors to join the funding round. Even so, the company would retain clear majority ownership.

As per the reports, the Walmart CEO Doug McMillon arrived at the Flipkart headquarters in Bengaluru on the Wednesday in order to declare the same deal.

Over the years, the two have invested some of their wealth in newer Indian startups, such as smart electric-scooter maker Ather Energy, robotics company GreyOrange, and Team Indus, which was building a spacecraft to compete for Google's XPrize lunar award. "We are proud to back Indian entrepreneurs whom we believe have what it takes to build outstanding and long-lasting businesses, and Flipkart is a great example of this", says Bob van Dijk, Naspers Group CEO. Sachin Bansal will sell his entire stake to Walmart while Binny Bansal will sell part of his to the American retailer, The Economic Times reported on Tuesday.

Jason Benowitz, senior portfolio manager at the Roosevelt Investment Group, said the deal probably will not do much to change market share between Flipkart and Amazon in India. Indian regulations, however, rendered this impossible, Meena said.

Flipkart was already struggling to keep pace with the huge investments that Amazon was able to infuse into its India operations.

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He also said the deal is CEO McMillon's "boldest move yet as he continues to transform the company to compete/succeed in the future of retail".

Walmart said it expects e-commerce to grow at four times the rate of overall retail in India. Some early employees of Flipkart are expected to get more than 1 crore each after this deal.

Flipkart started as an online books selling platform. The partnership will give Walmart a 77 percent stake in a rapidly growing market which is now comprised of 1.3 billion people. To put this in context - supply chain is also the strength of Amazon, Flipkart's ace competition. Both figures had climbed more than 50 percent over the previous year. There are fewer sentiments; exactly what Flipkart and Walmart would need now. Flipkart, on the other hand would provide local domain knowledge and customer insights to boost Walmart's play in the Indian market.

Now, Walmart India owns and operates 21 omni-channel Cash and Carry stores under the brand name Best Price in nine states across the country.

Walmart has been trying to enter India for years but all its efforts proved to be futile.

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