[Analysis] The Flipkart Deal – Is it going to be Flipkart-Walmart or Flipkart-Amazon ?

India’s most valued startup and largest eCommerce player, Flipkart, currently valued at $12 billion, is already in the news for sometime regarding the ‘Flipkart-Walmart’ deal. Flipkart was founded in 2007 by former Amazon employees, Binny Bansal and Sachin Bansal (not related).  As per various Media reports, Walmart, world’s largest offline retailer is interested to purchase a significant stake in Flipkart.

There were also reports that Amazon is also in plans to buy Flipkart. Though, the ‘Flipkart-Walmart’ deal is more likely to take place. Let us try to understand both the cases in detail.

Flipkart-Walmart Deal

The ‘Flipkart-Walmart’ deal is more likely to take place. If it gets through, then the eCommerce scenario would be more of Walmart vs Amazon than Flipkart vs Amazon. Walmart’s investment in Flipkart will not only make the competition fierce but will also help it to defend its #1 position in home turf. Since Walmart doesn’t have any online presence in India, the deal is expected to face very few regulatory hurdles as compared to the ‘Flipkart – Amazon’ deal.

 

Flipkart-Amazon Deal

As per Media reports, Amazon may submit a rival offer to buy Flipkart and may also pay a ‘Breakup fee’ to initiate talks. They seem to be more worried about Walmart than Alibaba. Both Flipkart and Amazon have around 70% to 80% of the total market share. This requires approval from CCI (Competition Commission of India) and also need to obtain various regulatory clearances because of monopoly issues. If the deal goes through, then Flipkart will become the single largest eCommerce player in India and it would create a monopoly in the industry.

The Flipkart-Walmart deal can be seen as a reply to Amazon’s $5 billion investment in India. Walmart’s entry into e-commerce is going to happen at a time when Amazon has bought 5% stake in Shoppers Stop last year. Neither of two moves is official at the time of writing this story.

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  1. […] in Flipkart for $16 billion. With this move, it becomes the world’s largest retail deal. The Flipkart-Walmart investment also includes $2 billion of new equity funding. While the remaining stake will be held by some of […]

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