Walmart, the world's largest retailer, is said to be in advanced discussions to invest $1 billion for a minority stake in ecommerce major Flipkart, a move aimed at taking on their common rival Amazon in India.
Walmart and Flipkart are in discussions for forging an alliance, sources close to the development said.
Walmart in an emailed statement said: "As a policy, we do not comment on speculative reports."
Flipkart spokesperson said: "It is our policy not to comment on rumours or speculations."
The likely talk comes close on the heels of the US retailer entering into a deal with China's second-largest ecommerce firm JD.com in June amid growing competition from Alibaba Group Holding. As per the terms of the deal, Walmart will get a 5 percent stake in JD.com worth $1.5 billion in exchange for selling its online grocery store to the Chinese ecommerce firm. Two months later the US retail major announced up a deal to acquire Jet.com for $3.3 billion to spruce up its ecommerce business.
According to market watchers, the Flipkart-Walmart tie-up will help the companies compete strongly against US-based Amazon.
Amazon has committed about $5 billion towards its Indian business and is aggressively ramping up its supply and delivery operations.
Walmart had earlier established a retail joint venture in India with Bharti Group. However, Walmart eventually sold its stake to the partner.
For Flipkart, a minority stake sale could bring in fresh funds into the company and help further compete with Amazon. Also, Flipkart can leverage Walmart's global supply chain and use the latter's wholesale stores in Jammu, Chandigarh etc. among other locations for pickup and delivery points.
In case of Walmart, holding a minority stake in Flipkart will help it to have a presence in the country's growing ecommerce market besides allowing it to sell goods through multiple channels, the Economic Times report said earlier this week. The US-based retailer can also eye the home-grown etailer's rising user base.
Last week, Flipkart said it has crossed the 100-million registered users mark, becoming the first e-commerce company in the country to hit the milestone. The Bengaluru-based company has also doubled its user base over the last year and added 25 million users in the past six months alone.
The company is engaged in a battle for supremacy with Amazon and another domestic challenger Snapdeal, where all three will be slugging it out to notch up robust volumes in the forthcoming festival sales offer starting later this week.
India is one of the world's fastest growing online commerce markets with reports pegging the potential to reach $30 billion by 2020.
With PTI inputs
Published Date: Sep 28, 2016 05:21 pm | Updated Date: Sep 28, 2016 05:21 pm