Amazon started as online book store and has grown to be the worlds largest online retailer.
Walmarts beats Amazon but has issues closing the Flipkart deal
It looks like Flipkart have decided to sell to Walmart rather than Amazon with a likely reason being it will be easier to get the FLipkart deal past the regulators. Selling to Amazon, the number 2 site in India would created competition concerns whereas Walmart’s presence in India is much smaller.
Walmart aren’t going it alone however, it appears that Google’s parent company Alphabet is grabbing a stake of perhaps 10% in a $20 billon valuation. FLipkart’s founder will sell his entire stake and Walmart will end up with anything up to 70+% of Flipkart.
There is no certainty that the deal will go through however. Softbank, one of Flipkart’s investors, have been caught wrong footed not expecting a deal to close quickly. They’re apparently wanting to hold off on the sale of their shares for perhaps a year to figure out how to avoid a massive tax liability.
There is one other issue with the proposed deal and that’s eBay. There’s been no news on how Walmart will be able to go ahead with the acquisition without squaring things with eBay’s 2017 investment when Flipkart acquired eBay India. There are still three years of the eBay-Fipkart cooperation agreement left to run and there’s no sign that eBay won’t want to enforce the deal which covered Flipkart’s cross border trade. If that deal is torn up then eBay may lose their stake in India.
If we assume that the problems will be solved and the deal goes ahead, then Amazon will be head to head with Walmart in India but currently Amazon is growing fast in the country and will doubtless redouble their efforts to become the number one marketplace.