Walmart makes $15B bid to compete with Amazon in India

The country is viewed by both companies as a major market for international growth

(Credit from back: Mike Mozart/Jeepers Media; Wikimedia Commons)
(Credit from back: Mike Mozart/Jeepers Media; Wikimedia Commons)

India is the most recent site of Walmart’s proxy war with Amazon.

Walmart’s $15 billion bid to buy a 75 percent ownership stake in the Indian e-commerce platform, Flipkart, which was founded by two former Amazon employees, is an attempt to compete with online retail giant as it continues expanding in the market, reports the Wall Street Journal.

Why India? The country’s retail market is worth about $800 billion in sales and is expected to grow to $1 trillion over the next two years, however most retailers are mom-and-pop shops, which leaves foreign companies one primary opening to break into the market: e-commerce.

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Amazon launched its local operations in 2013 and the Indian market has since become a large part of its international retail business with analysts estimating it will boost retail revenue by 30 percent in three years.

Walmart, however, launched brick-and-mortar stores in the country back in 2009 and hasn’t experienced the same growth in large part due to local regulations for foreign-owned physical stores and the company’s slow start when it came to setting up e-commerce capabilities.

Flipkart has received backing from SoftBank Group, Tencent Holdings and Microsoft, and inside sources reported on Friday that its board had approved the deal with Walmart. The move comes after Walmart’s recent sale of its UK grocery chain Asda for about $4 billion despite paying nearly $11 billion for the retailer in 1999. [WSJ]Erin Hudson