Walmart Inc., the world’s largest retailer, has strengthened its position in the Indian e-commerce market by buying out the remaining stake of Tiger Global Management LLC in Flipkart Group, the country’s leading online shopping platform. The deal, which was reported by the Wall Street Journal on July 30, 2023, valued Flipkart at $35 billion, down from $38 billion in 2021.
Walmart paid $1.4 billion to purchase Tiger Global’s stake, which was about 4% of Flipkart’s total shares, according to the newspaper. The transaction took place in recent days and was disclosed in a letter by the New York-based hedge fund to its investors. Tiger Global, one of the earliest and most influential investors in Flipkart, had invested about $1.2 billion in the Indian startup since 2010 and had made a profit of $3.5 billion from its exit.
The acquisition of the stakes from Tiger Global means Walmart will hold about 77% of Flipkart, up from 72% previously. Since then, Walmart has been increasing its investment and involvement in Flipkart’s operations and expansion. The deal is a sign of Walmart’s commitment and confidence in Flipkart
Talking to People Matters, Rajneesh Kumar, SVP and Chief Corporate Affairs Officer, Walmart India, said, “Walmart is committed to the country for the long term. We have been running Cash & Carry business in India for almost a decade now and enabling growth, success and modernization of small Kiranas.”
In July 2021, Walmart led a $1.2 billion funding round for Flipkart, which also saw participation from Tencent Holdings Ltd., Tiger Global, and other existing shareholders.
In April 2023, Walmart announced that it would invest $500 million in Flipkart’s digital payments arm PhonePe, which competes with Google Pay and Paytm in India.
Walmart’s interest in Flipkart is driven by the huge potential and growth of the Indian e-commerce market, which is expected to reach $200 billion by 2026, according to a report by Bain & Company and Flipkart. India has over 700 million internet users and more than 300 million online shoppers, with millions more joining every year. Flipkart, which was founded in 2007 by Sachin Bansal and Binny Bansal, has been at the forefront of this digital revolution, offering a wide range of products and services across categories such as fashion, electronics, groceries, furniture, books, and more.
Flipkart also owns Myntra, a leading online fashion retailer; Ekart, a logistics and delivery service provider; and Jeeves, an after-sales service company. In addition, Flipkart has been investing in emerging sectors such as social commerce, video streaming, gaming, and hyperlocal delivery. Flipkart claims to have over 300 million registered users and more than 200 million monthly active users on its platform.
However, Flipkart also faces intense competition from its rivals, especially Amazon India, which has been aggressively expanding its presence and offerings in the country. Amazon India, which launched in 2013, has invested over $6.5 billion in its Indian operations and has built a network of over 50 fulfillment centers and hundreds of delivery stations across the country. Amazon India offers over 200 million products across categories such as fashion, electronics, groceries, home appliances, books, and more.
Amazon India also owns Prime Video, a video streaming service; Prime Music, a music streaming service; Audible, an audiobook service; Kindle, an e-reader device; Alexa, a voice assistant device; and Amazon Pay, a digital payments service. Amazon India claims to have over 150 million registered users and more than 100 million monthly active users on its platform.
Both Flipkart and Amazon India are also facing regulatory challenges from the Indian government, which has been tightening its rules and policies for foreign-owned e-commerce companies operating in the country. The government has imposed restrictions on online marketplaces such as Flipkart and Amazon India from selling products from their own or affiliated sellers, offering preferential treatment or discounts to certain sellers or products, or influencing the prices of goods or services on their platforms.
The government has also proposed new regulations that would require online marketplaces to disclose more information about their sellers, products, pricing policies, inventory sources, delivery terms, return policies, customer reviews, ratings, complaints, and grievances. The government has also sought to impose higher taxes on foreign-owned e-commerce companies and mandate them to store their data locally.
Despite these challenges, Walmart remains optimistic about Flipkart’s prospects and plans to support its growth and innovation in the Indian market. Walmart’s CEO Doug McMillon said in a statement in April 2023 that “Flipkart continues to leverage its culture of innovation to accelerate growth and enable millions of customers, kiranas and sellers to prosper and be part of India’s digital transformation.” He added that “Walmart is excited to continue working with Flipkart’s excellent leadership team to sustain its success and create shared value.”
However, disagreeing with this fact, various trade associations have opined that it’ll kill the Indian economy and will lead to job losses.
