INDIA: Walmart To Pick Up $1bn Stake In Flipkart?

Walmart is reportedly in advanced talks to pick up a minority stake in Flipkart, India’s leading online retailer, for as much as $1bn.

The move, if confirmed, would provide a major fillip to Flipkart, which has come under severe pressure from Amazon India.  A deal with Walmart would offer it significant funds to counter Amazon’s recently-announced $3bn investment into the country, without the hassle of raising funds from private equity (as it has in the past).

Such a tie-up would also give Walmart a major foothold into India’s fast-growing online market, and allow it to potentially face Amazon on a more equal footing in the future.  India’s online market is estimated to be worth $28bn by 2020, based on current growth levels.

Neither Flipkart nor Walmart have commented on the report.

NAM Implications:
  • Where at: The main issue for retailers – or suppliers – partnering with Walmart at local level can be having to ‘serve the world’ following initial success and Walmart liking the service…
  • Where headed: Ok if Walmart decide to take over Flipkart (although having to pay $1bn for a minority stake makes this a big step), but access to Flipkart could enhance Walmart’s offering elsewhere, with Amazon a rival that is unlikely to sit on the sidelines…
  • Effect on you: Expect a Walmart-Amazon running battle that will probably encourage others to enter the fray, thereby raising the operational standards for online…
  • Action: Why not imagine a world where online is as competitive as current multiple retailing, and take a vie of your offering and oerations to identify changes that might represent a competitive edge in a future that may be nearer than you think?