Is Walmart arming for a global battle with Amazon?
Walmart’s recent acquisition of Jet.com was seen by many, if not all, as part of the retailer’s plan to contest Amazon.com’s e-commerce dominance in the U.S. market. The strategic alliance between Walmart and JD.com in China was seen as part of a plan to improve the company’s e-commerce odds in the Asian nation. Now come reports that Walmart is in talks to invest up to $1 billion in Flipkart, the largest online retailer in India. So, what do all these moves add up to? Has Walmart made a strategic decision to confront Amazon in every major market across the planet?
Walmart’s talks with Flipkart, a company started by two former Amazon employees in 2007, would give the U.S. retailer a minority stake in the business. Flipkart, which was recently valued at $16 billion, could use the cash influx as it competes with Amazon, which is increasing its investment in the country. In June, Bloomberg reported, Amazon CEO Jeff Bezos said his company planned to invest an additional $3 billion on top of the $2 billion it has already put into growing its share of the Indian market.
Reuters, citing a Bank of America report, said Amazon is expected to increase its share in India from its current 31 percent to 37 percent by 2019. Flipkart holds a nearly 44 percent share of the market at the present time.
Flipkart has seen its growth hit a wall over the past year-and-a-half, according to The Economic Times, because of the financial limits of Indian consumers. In response, the company has increased its focus on private labels, instituted exchange programs on smartphones, offered low-interest monthly payments on purchases, and focused more on customer loyalty efforts along with other steps.
Walmart, which operates wholesale outlets in India, has not been able to crack the retail market in the country because of rules limiting foreign investment and the fractious nature of the business in that country.
“India does not lend itself to big box retail since rentals are very, very expensive. So the road ahead is either a Flipkart or an Amazon,” Kashyap Chanchani, managing partner of the Rainmaker Group, told Reuters. “Which is why it is natural for Walmart to look at Flipkart as they cannot acquire Amazon.”
Neither Walmart nor Flipkart would offer any comment on the reported talks between the two companies.
- In its quest for numero uno status in India’s etail war, Flipkart is transforming itself from within – The Economic Times
- Walmart Is In Talks to Invest Up to $1 Billion in Flipkart – Bloomberg
- Walmart is in talks to buy stake in Indian online retailer Flipkart: Report – Reuters/CNBC
- Walmart and JD.com Announce Strategic Alliance to Serve Consumers across China – Walmart Stores, Inc.
DISCUSSION QUESTIONS: Do you think Walmart has made the strategic decision to find ways to confront Amazon.com in major e-commerce markets across the globe? What do you think is the likely outcome for Walmart and Amazon if this is true?