Is Walmart Spending $12 Billion to Compete with Amazon?


It seems like not a week goes by without Amazon making some kind of significant announcement. Most recently, the company surpassed the already high expectations Wall Street had for them. Because Amazon continues to grow and evolve at such a rapid pace, no one in retail or technology can afford to ignore them. That even includes the biggest players like Walmart.

Over the last few years, Walmart has made some very significant investments and acquisitions. The majority of those moves have appeared to be in response to things Amazon is doing. The same is true for their most recent move, which is believed to be a massive investment in Flipkart.

More Information About Flipkart and Walmart’s Proposed Investment

If this is your first time hearing about Flipkart, you’re not alone. But even though the brand isn’t that well known in the United States, it’s one the largest e-commerce companies in India. As of this month, the company has a valuation of $20 billion. Last year, Flipkart did $3 billion in revenue.

While e-commerce in India still has a lot of room to grow before it reaches any type of maturity, Flipkart has already built a very strong brand over the last decade. What’s interesting is both of the founders actually worked for Amazon before leaving to form their own company.

Last year, eBay did a significant deal with Flipkart by giving the company a $500 million investment, along with selling the Indian portion of their business. Then in August of last year, Softbank’s Vision Fund pumped an additional $2.5 billion into the company.

Given how much money the company has already raised and its current valuation, it’s not surprising that Walmart’s bid for a majority stake is quite large. Although the figure hasn’t been publicly disclosed, it’s believed to be in the $12 billion range. This would give Walmart key access to an emerging market with over 1.3 billion potential consumers. And given the dominance Alibaba has established in China, India is believed to be the next largest market that’s still available to Western companies.

Amazon Isn’t Relenting

It’s no secret that there’s a lot of competition between Amazon and Walmart. But after news came out about Walmart’s proposed offer, the level of competition became even more clear when Amazon submitted their own bid.

While the offer is believed to be around the same amount as Walmart, industry experts believe that Amazon will not be selected by Flipkart. One key reason is Walmart is committed to retaining Flipkart’s current structure. The other reason is a deal with Amazon would require Flipkart’s founders to sign a non-compete deal.

What This Means for Your Business

If the deal goes through, the main impact it may have on any US business that sells products is eventually providing easier access to the more than 1 billion consumers in India. We’ll keep you updated on this deal as it progresses, along with any other big marketplace news. In the meantime, if you want to serve as many customers as possible through your own website, be sure that your credit card processor is up to the task.

Posted on Wednesday, July 25th, 2018