Published: Fri, May 11, 2018
Finance | By Jaime Brady

Walmart's New Foothold in India Has as Many Customers as Amazon Prime

Walmart's New Foothold in India Has as Many Customers as Amazon Prime

The deal completely redraws the e-commerce landscape in India and escalates Walmart's global battle against Amazon.com Inc., its biggest rival in the US.

The fresh funds will provide more arsenal to Amazon.in, which has been aggressively investing in expanding infrastructure and adding solutions to enhance consumer and seller experience.

Walmart executives said they were particularly interested in PhonePe, Flipkart's mobile payments app, along with its fashion sites Myntra and Jabong.

S&P lowered Walmart's outlook to negative from stable, citing increasing leverage and risks stemming from the company's spending to expand online and globally as it continues its share buyback program.

"This investment is of enormous importance for India and will help fuel our ambition to deepen our connection with buyers and sellers and to create the next wave of retail in India", said Binny Bansal, Flipkart's co-founder and group CEO.

Now, ET claims Bansal was deeply engaged in the negotiations with Walmart, and was even planning to buy more shares and not sell his stake.

Reacting to the deal, RSS affiliate Swadeshi Jagran Manch has alleged that Walmart was "circumventing" rules for a "back-door entry" into India, and sought Prime Minister Narendra Modis intervention to safeguard "national interest". Flipkart will maintain a separate brand and operating structure, the companies said. Last year, according to figures released by Forrester, the online retail market in the country grossed up US$21 billion.

Like Wiesel, Charlie O'Shea, lead retail analyst at Moody's, highlighted the investment Walmart is making for the future, particularly as India's smartphone use booms and millennials drive online shopping.

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"While eCommerce is still a relatively small part of retail in India, we see great potential to grow".

Jared Wiesel, partner at the tech-enabled consulting firm Revenue Analytics, said Walmart - which has traditionally operated physical stores - would also benefit from Flipkart's technological expertise.

The deal also shows how Walmart CEO Doug McMillon is reshaping the company's global operations, prioritizing faster-growing markets like China and India over more mature ones. Walmart will retain a 42% stake in that combined company.

Amazon's arrival into the deal deliberations a month later in December 2017 did not make much of an impact as the Flipkart founders and its investors felt the Competition Commission of India would block any possible deal between the two competitors.

Flipkart competes with Amazon across a range of product categories.

Like Amazon, it started as an online bookstore.

Although Flipkart has been suffering losses, they have managed to draw in some huge investors like Softbank, Tencent and Microsoft.

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