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Walmart Invests $16B in E-Commerce With Flipkart Deal

Walmart has confirmed a $16 billion deal to buy a controlling stake in Flipkart, an Indian e-commerce company.

The acquisition “is the largest acquisition yet by the world’s largest retailer,” according to an article from the Associated Press.

Within the past three years, Walmart has made a series of business acquisitions to compete more vigorously online with Amazon and other e-commerce companies.

In 2016, Walmart bought online retailer Jet.com for $3 billion in cash and $300 million in Walmart shares. In 2017, the giant retailer announced acquisitions of three online apparel retailers for a combined sum of about $436 million: Moosejaw, an outdoor clothing retailer; ModCloth, a women’s apparel and accessories online retailer; and Bonobos, an online menswear seller.

The May 9 Flipkart announcement from Walmart comes after reports that Walmart was competing against Amazon to buy into the Indian company.

Walmart and Amazon were attempting to woo Flipkart in order to become the “first major U.S. retailer to establish a substantial foothold” in India, the Associated Press article says.

“Walmart believes India, which has 1.3 billion people, could be among the world’s top five e-commerce markets within the next five years,” the Associated Press reports.

Online sales in India have grown exponentially and the Indian e-commerce company reported sales of $4.6 billion in the last fiscal year, Walmart says in a statement.

The American retailer’s 77-percent controlling stake in Flipkart represents a long-term investment, says Doug McMillon, president and CEO of Walmart.

“India is one of the most attractive retail markets in the world, given its size and growth rate, and our investment is an opportunity to partner with the company that is leading transformation of e-commerce in the market,” McMillon says in a company statement.

Flipkart offers a cash-on-delivery payment system and, in 2016, the company’s app became the first in India to reach 50 million users, the Associated Press reports.

“Flipkart has established itself as a prominent player with a strong, entrepreneurial leadership team that is a good cultural fit with Walmart,” says Judith McKenna, president and CEO of Walmart International. “Over the last 10 years, Flipkart has become a market leader by focusing on customer service, technology, supply chain and a broad assortment of products. With Flipkart and the other shareholders who have come together, we will continue to advance the winning eCommerce ecosystem in India.”

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