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India's e-commerce battlefield heats up with Walmart's entry

11 May, 2018, 04:41 | Author: Sara Gill
  • Flipkart’s group CEO Binny Bansal who will also take on the role of chairman after Sachin Bansal’s exit and CEO Kalyan Krishnamurthy are expected to remain at Flipkart after the deal goes through

Sachin Bansal said he will be "cheering from the outside" and urged Flipkart team to continue with the momentum.

Japans SoftBank Group Corp sold its 20 per cent stake, which it had acquired for Dollars 2.5 billion, for about USD 4 billion.

Sachin had once categorically said in an interview that he will never sell Flipkart, but after seeing ups and downs in business through 11-years, the e-commerce co-founder has finally quit.

Walmart's head of investor relations, Brett Biggs, stated at a conference that China and India have the major potential to be huge growth markets for Walmart due to the fact that more than 33% of the world population resides in these two countries and hence they continue to be very important chances for Walmart.

Flipkart rejigged its management and Binny took over as CEO.

There's also the government to consider, as the contract is subject to regulatory approval. This is partly because although the Internet and Mobile Association of India estimates that there are approximately 481 million internet users in India, the number of individuals with enough disposable income to shop online is still relatively small.

During a recent investor call, Amazon CFO Brian Olsavsky had said the company would continue to invest in India as it sees?great progress? with both sellers and customers here, even though as the United States e-tailing giant had registered a loss of Dollars 622 million from global operations in the first quarter of 2018.

"But strangely, Walmart is (attempting) using the e-commerce route to circumvent rules to attack Indian market". Walmart CEO Dough McMillon has landed in Bangalore to announce the deal officially.

Livemint, meanwhile, reported that $500 million has been set aside to buy back shares from current and ex-Flipkart employees, making it the biggest ESOP (employee stock options) buyback in the Indian startup arena.

"We are delighted and humbled by the trust from our customers, to lead in India on things that matter to our customers in five years of our business, while continuing to launch innovative India-first initiatives as well as completely new offerings like Echo, Prime, Prime Video and Prime Music", the spokesperson added. Last year, according to figures released by Forrester, the online retail market in the country grossed up US$21 billion.

Walmart and Tencent are connected via more than just Flipkart.

Sachin and Binny, who are not related and formerly worked for Amazon.com Inc, like their USA rival began by selling books when they founded Flipkart.

Walmart still tried to enter India via a wholesale model, with Bharti Enterprises in India, but terminated the deal after a $151m loss.

In a $16 billion deal, Walmart Wednesday bought 77 per cent stake in Flipkart from existing shareholders including Japan's Softbank Group.



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