People familiar with the matter told Bloomberg the retailer is in talks to pump as much as $1 billion into Flipkart, India’s largest online marketplace that recently received a $16 billion valuation from investors.
Negotiations are ongoing, but the source said Walmart would become a minority stakeholder in the business once a deal is reached. Founded in 2007, Flipkart boasts more than 26 million registered users clocking over 8 million visits daily, but Amazon’s recent $3 billion investment in its 3-year-old Indian arm has threatened its number one position.
“If the deal goes through, the competitive intensity between Flipkart and Amazon will shoot up,” Gautam Chhaochharia, the Mumbai-based head of India research at UBS, told Bloomberg.
It would also be a smart move for Walmart, offering the U.S. retailer exposure to India’s growing e-commerce market, which eMarketer estimates will reach $79.41 billion in sales in 2020.
At the same time, it’s a chance for Walmart to compete with Amazon on a more level playing field. Despite shelling out so much money for e-commerce upstart Jet.com, the acquisition will merely help Walmart become better at omnichannel, not surpass Amazon as the number one online retail destination in the U.S.—but it could help Flipkart retain its title in India.
But Chinese e-commerce giant Alibaba Group is aiming for India, too. It recently signed partnerships with Kotak Mahindra Bank, IDFC Bank, Delhivery, DHL and Aditya Birla Finance to provide banking, logistics, transactional and courier services to Alibaba’s 6 million registered buyers and sellers in India.