Continuing to be what is already a lucrative market for global companies, the battle for the e-commerce market in India is getting intense day by day. While global giants such as Alibaba, Rakuten are the latest entrants into Indian ecommerce, it’s now none other than Walmart Stores, which is reportedly exploring an equity partnership with homegrown e-commerce firm Flipkart.
According to a report by ETTech — which cites two people aware of the matter — this partnership between Walmart and Flipkart is a move aimed towards taking action against their common rival and one of the biggest online retailers globally — Amazon. An enemy of your enemy is a friend after all, ain’t it ! The report further states that both companies are currently in early talks. A meeting is scheduled this week that will include discussions on Walmart picking up a minority stake in Flipkart.
A person aware of the development has suggested that it is likely that Walmart is looking for a “strategic deal” with Flipkart. It will be similar to the one that the company forged with JD.com in China. In June this year, Walmart acquired around 5% stake in JD.com, which is the second largest Chinese e-commerce marketplace, for about $1.5 billion.
It is not yet clear how much share is Walmart looking to acquire and at what price. However, if this deal happens, it will definitely give the much required boost to Flipkart in its fight against Amazon India. On the other hand, Walmart will get foothold in one of the world’s largest market.
Furthermore, the alliance will also allow Flipkart to leverage Walmart’s global supply chain, increase efficiency in procurement and product assortment. Walmart’s Best Price wholesale stores that are currently present in several locations in India, such as Jammu, Chandigarh, Guntur, Lucknow, etc., could also be used as pickup and delivery points for Flipkart.
Walmart, in order to shore up its online presence, recently acquired Jet.com in the US, for about $3.3 billion in the largest-ever purchase of an e-commerce company. Alibaba, which already has presence in India through investments in Snapdeal and Paytm, recently hired former McKinsey executive Madhur Deep as the Senior Vice President, further strengthening its core team in India.
In order to get hold of a majority of market share, Amazon has also been coming up with a multitude of services in India. It recently launched Amazon Prime, and is currently gearing up to launch Prime Video in India. Earlier this week, Amazon pumped in around 17.25 million into its wholesale unit, bringing total to Rs. 155 crore.
Flipkart, on the other hand, is going through hard times due to lack of funds and top-management exits, but recently claimed to have crossed the 100 million registered users mark. However, we highly doubt that.
The Indian e-commerce market is among the fastest growing in the world and the Bank of America Merrill Lynch Report released in September 2016 considers Flipkart as the market leader with over 43% market share. The Morgan Stanley report on E-commerce in India released in February 2016 also placed Flipkart as the number one e-commerce company in India with a market share of 45%.