Walmart Buys Flipkart; Grabs 77% Stake For $16 Billion

The US-based supermarket chain Walmart is set to enter the Indian e-commerce market after acquiring a controlling stake in the Flipkart, according to a TOI report. The news has been confirmed on Wednesday afternoon by Mayaosho Son, CEO of SoftBank. It’s worth noting that Softbank owns 20% stake in Flipkart. An official announcement is yet to arrive.

Walmart will shell out around $16 billion to buy roughly 77% stake in Flipkart, which is valued at $20 billion. The new Flipkart will have Binny Bansal as the new chairman and group CEO, while its co-founder Sachin Bansal will make an exit after selling his share of the company. In addition to Walmart, Google’s parent Alphabet will invest around $1.5 Billion in the company to get hold of 5% of the stake.

There’s no doubt that the news about Walmart spreading its reach in India has rung the bells at Amazon, Walmart’s enemy from the same motherland. The Jeff Bezos-led company recently decided to put a cash load of 2,600 crores ($386.6 million approx.) for their Indian unit.

The company has committed to an investment of $5 billion in the Indian market. And despite registering losses in the international market, during a recent investors call, Amazon’s CFO Brian Olsavsky said investments in India will continue to happen as they have seen great progress with both sellers and customers.

Amazon has already made a big dent in Flipkart’s business by providing offers and free delivery options through their Prime subscription – a compelling enough reason to buy from Amazon. The company provides unlimited music and video streaming services at no additional cost.

But then there is Walmart — the multi-billion dollar American behemoth has been in the country for a few years in the form of limited wholesale business. Walmart is infamous for wiping out smaller businesses through their highly competitive pricing. Let alone offline retailers, Walmart’s foray could even impact online sellers on Flipkart as well. The retail giant could launch their in-house brands on the e-commerce platform.

Hopefully, for the customers, the story seems to be all-good, at least, in the beginning. The trade war between Amazon and Walmart-owned Flipkart would bring cheap products and offers for them.