Walmart is going head to head with Amazon in India

A decade after first launching in India and a series of false starts, US retail behemoth Walmart is relaunching its business there, with a $16 billion investment in Flipkart, the country’s largest online retailer — putting it head to head with its long-term rival Amazon. Walmart confirmed yesterday that it had agreed to acquire 77 per cent of Flipkart, buying $14 billion of stock from existing shareholders including Japan’s Soft-Bank and investing $2 billion of fresh equity — the largest foreign direct investment in Indian history… With the help of major investors including US hedge fund Tiger Global Management, analysts believe that Flipkart still remains ahead of Amazon in terms of sales, five years after the latter’s Indian launch. They expect Walmart’s investment to result in a major boost to Flipkart’s logistical operations, and moves into new areas such as online groceries… The problem for Walmart is that succeeding in India may mean losing a lot of money upfront. Amazon has pledged to spend $5 billion building its India business, while Flipkart has raised billions of dollars from SoftBank, Microsoft, Tencent and others as it looks to maintain its leadership. In the financial year ending in March 2017, the net loss at Flipkart’s parent group climbed 68 per cent to Rs87.7 billion ($1.4 billion). Walmart said yesterday… that Flipkart would maintain a distinct brand and that it intended to list the company in the future, while maintaining its majority stake.
Kiran Stacey and Simon Mundy