Walmart announced that it has completed a $16 billion investment in Flipkart, a Bengaluru, India-based E-commerce company.
The acquisition sees Walmart take a 77 % share in the company, buying out a number of prior investors in the process and expanding its rivalry with Amazon to a new horizon. It will also transform Walmart’s position in a nation with more than 1.3 billion people, strong GDP growth, a growing middle class and significant market for smartphone, internet and e-commerce.
“Walmart and Flipkart will achieve more together than each of us could accomplish separately to contribute to the economic growth of India, creating a strong local business powered by Walmart,” said Judith McKenna, president and CEO of Walmart International.
Flipkart is India’s number 1 e-commerce platform, ahead of Amazon, which is in 2nd. Founded in 2007, Flipkart provides a powerful technology foundation, including artificial intelligence, and leadership in such market divisions as large appliances, electronics, mobile, and fashion and apparel. The company’s supply chain arm, eKart, serves more than 800 cities and makes 500,000 deliveries daily.
After Walmart’s 77% stake in Flipkart, the rest of company will be run by existing investors such as Tencent, Microsoft, co-founder Binny Bansal and Tiger Global. Walmart promised to work on national initiatives to create economic growth in agriculture, food and retail as part of the deal.
Walmart said that its plans for India will include investments that “support national initiatives and will bring sustainable benefits in jobs creation, supporting small businesses, supporting farmers and supply chain development and reducing food waste.”
Walmart also plans to use Flipkart as a “key center of learning” for the rest of its business across the world, and that includes its home market, reports TechCrunch.
“Not only is [Flipkart] innovative [with the] problem-solving culture that they have, but they are doing some great work both in the AI space, how they are using data across their platforms but particularly in terms of the payment platform that they’ve created through PhonePe. All of those things we can learn from for the future and see how we can leverage those around the international markets and potentially into the US as well,” McKenna said back in May when the deal was announced.
The deal will not only provide a boost for Flipkart, its business could also become a whole lot more transparent since it will report its quarterly results as part of Walmart’s earnings. Although they will be part of its international business so that might provide some protection from direct scrutiny.
Flipkart boasts more than 100 million users, 100,000 sellers and 80 million items on its platform. Last year, the company reported $4.6 billion in net sales, according to Walmart, a rise of 50% over the previous year.