The new Fiscal Year has one of the biggest developments in the e-commerce sector. Homegrown e-commerce giant Flipkart has been trending in the news for the past few months. The company has continued to raise funds from Softbank, and other investors in a bid to expand its logistics centers in Kolkata and Bengaluru.
At the same time, the company has continued burning cash to attract new customers and customers from its rivals like Amazon. Softbank started spearheading the talks between Walmart Inc. and Flipkart’s board soon after Walmart Inc. announced its plans of buying 40% stake in Flipkart at a discounted valuation.
However, as per recent media reports, Amazon might also submit its offer to buy a handsome stake in Flipkart. But the chances are highly unlikely. If major stake in Flipkart is acquired by Amazon, the e-commerce market becomes a monopoly. Moreover, the Indian e-commerce giant is in no mood to deal with Amazon. Walmart Inc will be a preferred choice for this sale. The deal is roughly valued at $21 Billion in a primary and secondary share purchase.
Striking a successful deal is very important for Walmart, as it faces tough competition with its rival Amazon in the US and other international markets. At the same time, many Flipkart investors are more than willing to sell their shares by opting for a premium, given Flipkart’s failure to become profitable even after a decade, according to close sources.
Through this sale, Walmart, the world’s largest brick-and-mortar retailer, aims to penetrate into the e-commerce market, which is expected to touch $200 Billion in a decade’s time, as reported by Morgan Stanley.
Amazon’s proposal to buy Flipkart might just be limited to papers. It is nothing more than an exhibition of its finances, and ability to acquire even the biggest. Amazon already announced its plans to invest $5 billion in the coming years in India alone, a measure it claims, to diversify their products, by expanding into grocery delivery. Many onlookers believe that grocery delivery will be the next biggest thing in Indian e-commerce sector.
Sachin Bansal and Binny Bansal, Founders of Flipkart had previously worked in Amazon. They seem to have taken a cue from their previous boss Jeff Bezos; be it the Big Billion Sale or flash sale, to become India’s largest e-commerce retailer. Currently, Softbank holds 20.5% stake in Flipkart, after investing $2.5 Billion last year when Flipkart was valued at $12 billion.
PayTM Mall is not far behind, with Softbank & Alibaba group infusion of additional funding to Paytm mall recently, gives it enough muscle to flex in the highly competitive e-commerce market in India to compete directly with Flipkart and Amazon.