• Walmart is paying around US$16bn for an initial stake of around 77% in Indian e-commerce leader Flipkart.
  • Through the deal, Walmart says it will support small business and 'Make in India' through direct sourcing.
  • India has more than 1.3bn people, strong GDP growth, and is one of the world's largest and fastest-growing economies.
Walmart is buying a 77% stake in Flipkart

Walmart is buying a 77% stake in Flipkart

Retail behemoth Walmart has its eye on growth in the Indian market with the acquisition of a majority stake in e-commerce retail giant Flipkart Group, in a move that will allow it to support local supply chains.

Walmart will pay around US$16bn for an initial stake of around 77% in Flipkart – an e-commerce leader in India for electronics, large appliances, mobile and fashion and apparel.

The remainder of the business will be held by some of Flipkart's existing shareholders, including co-founder Binny Bansal, Tencent Holdings Limited, Tiger Global Management and Microsoft Corp.

While the immediate focus will be on serving customers and growing the business, Walmart says the deal provides a unique opportunity, consistent with its approach of looking for innovative ways to grow domestically and internationally, particularly in markets with significant long-term opportunity.

India is a country with more than 1.3bn people, strong GDP growth, a growing middle class and significant runway for smartphone, internet and e-commerce penetration. It is one of the world's largest and fastest-growing economies.

"India is one of the most attractive retail markets in the world, given its size and growth rate, and our investment is an opportunity to partner with the company that is leading transformation of e-commerce in the market," said Doug McMillon, Walmart's president and CEO.

"As a company, we are transforming globally to meet and exceed the needs of customers and we look forward to working with Flipkart to grow in this critical market. We are also excited to be doing this with Tencent, Tiger Global and Microsoft, which will be key strategic and technology partners. We are confident this group will provide Flipkart with enhanced strategic and competitive advantage. Our investment will benefit India providing quality, affordable goods for customers, while creating new skilled jobs and fresh opportunities for small suppliers, farmers and women entrepreneurs."

In a market where Walmart expects e-commerce to grow at four times the rate of overall retail, and with well-known platforms such as Myntra, Jabong and PhonePe, Flipkart is uniquely positioned to leverage its integrated ecosystem, which is defined by localised service, deep insights into Indian customers and a best-in-class supply chain, it says.

Flipkart's supply chain arm, eKart, serves more than 800 cities, making 500,000 deliveries daily. In the fiscal year ended 31 March, Flipkart recorded net sales of US$4.6bn representing more than 50% year-over-year growth.

The two companies will maintain distinct brands and operating structures. Currently, Walmart India operates 21 Best Price cash-and-carry stores and one fulfilment centre in 19 cities across nine states in India, with more than 95% of sourcing coming from India.

As Walmart scales in India, the retailer says it will continue to partner to create "sustained economic growth" across agriculture, food and retail. This means future investments to support national initiatives such as creating jobs through the development of supply chains.

Walmart says it will support small business and 'Make in India' through direct sourcing as well as increased opportunities for exports through global sourcing and e-commerce. It will also look to support farmers and develop supply chains through local sourcing and improved market access.

"This investment aligns with our strategy and our goal is to contribute to India's success story, as we grow our business," adds Judith McKenna, president and CEO of Walmart International. "Over the last ten years, Flipkart has become a market leader by focusing on customer service, technology, supply chain and a broad assortment of products. With Flipkart and the other shareholders who have come together, we will continue to advance the winning e-commerce ecosystem in India."