American department store chain Walmart and Indian e-commerce party Flipkart’s negotiations may comprise more than only online retail. Chances are that it will introduce a physical chain.
Emerging market
Walmart would like to obtain more than 30 % of Flipkart’s shares, which is India’s largest online marketplace. The country is an emerging market with plenty of potential. It may actually be the case that Walmart will “only” obtain 20 % of shares: Softbank (which currently has 20.8 % in Flipkart) apparently resists the idea that Walmart would acquire such a large number of shares.
Flipkart and Walmart are apparently looking at an opportunity to open a new physical chain in India, something the Indian company has long considered, but held back because it needed a good partner. Walmart’s investment would be an important step in the right direction.
Amazon
To Walmart, the investment is mainly an opportunity to compete even more with Amazon. In the past few years, the American company invested a lot to expand its online division, including thanks to online retailer Jet.com acquisition. Walmart hopes to stay relevant online, considering Amazon is making global strides and has even taken away physical retailers’ turnover in the United States, including from companies like Walmart.
The company has long tried to gain access to India, but has always encountered issues with legislation that blocks foreign investments. It does already own 21 wholesale stores in the country.
