Amazon and Walmart are competing to get ahold of a majority stake in Flipkart, the leading Indian e-commerce company. According to the latest news reports, Walmart is apparently ready to invest $10-12 billion in acquiring 51% stake in Flipkart. Whether the reports are true or mere conjectures, let’s take a look at why a deal between Amazon and Flipkart is a big deal in India’s e-commerce sector.
About Flipkart – This e-commerce giant was founded by 2 former employees of Amazon – Binny Bansal and Sachin Bansal. Initially, they sold only books on their online platform. However, over the course of a decade, they expanded their product categories and saw a profit of over $6 billion dollars. Flipkart held the top place in e-commerce sector until Amazon made an entry into the Indian market. The company is expected to witness 30% CAGR growth by 2026. Therefore, for Amazon or Walmart to get a big piece of the pie is a big deal especially when they face competition from international players like Alibaba.
So, how does Flipkart stand to benefit from the deal? If the deal with Walmart or Amazon gets picked up, then Flipkart stands to get a strong financial backing, expand its supply chain, and increase its efficiency in procurement, and product assortment. In case Amazon manages to get a majority stake in Flipkart, then the two e-commerce giants will end up controlling at the least 80% of the online retail marketplace. If Walmart were to successfully make a deal with Flipkart, then they would compete with Amazon for the number one spot in the online retail sector.