10 May, 2018
Sachin and Binny Bansal, both former Amazon.com Inc employees, founded Flipkart in 2007, and like their USA rival, began by selling books. Flipkart and Amazon have been going head-to-head in a costly battle for domination of one of the fastest growing online retail markets since 2013. The partnership will give Walmart a 77 percent stake in a rapidly growing market which is now comprised of 1.3 billion people. The remainder of the business will be held by some of Flipkart's existing shareholders, including Flipkart co-founder Binny Bansal, China's Tencent Holdings, Tiger Global Management and Microsoft, the company said.
He is also learnt to have said the company intends to "empower" Flipkart and its staff as well as learn from them about building full ecosystems and payments.
The retail giant is taking an initial stake of around 77% in Flipkart, which was founded by ex-Amazon employees. It was reported to have sold its entire share in the Walmart deal.
According to the statement from Walmart, Walmart and Flipkart will leverage the combined strengths of both companies, they will maintain distinct brands and operating structures. However, Walmart has said that as it scales in India, it would support small businesses through direct procurement as well as by increased opportunities for exports through global sourcing and e-commerce.
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"Flipkart has established itself as a prominent player with a strong, entrepreneurial leadership team that is a good cultural fit with Walmart", said Judith McKenna, President and Chief Executive Officer of Walmart International. "We took on some of the biggest challenges and solved many complex problems for India". "It is much more hard for the government to control and regulate foreign owned platforms and all indigenous players will have no value if a foreign company runs the platform", Khandelwal claimed. It is expected that CEO Kalyan Krishnamurthy will remain at the helm of Flipkart with co-founder Binny Bansal to become executive chairman. Walmart's takeover will help in that area, boosting Flipkart and giving Amazon a run for its money. And now, it seems like American retailer may expand its wholesale operations.
Walmart's business in India had previously been focused on small businesses.
"This is clearly an investment for the future, and... is indicative of Walmart's long standing strategy of shifting resources into higher growth potential markets", said Charlie O'Shea, lead retail analyst at Moody's. Amazon had reportedly tried to stop this from happening by making a bid for Flipkart too, but it looks like the domestic firm refused.
Amazon may have been trying to spoil Walmart's plans until the very last minute.