Sunday, 21 October, 2018

Naspers sells out to Walmart

SoftBank CEO Masayoshi Son Says Walmart is purchasing Flipkart Walmart is dropping after announcing it's taking a majority stake in Indian e-commerce giant Flipkart
| 11 May, 2018, 04:44

In its projections, Walmart has indicated that it expects Flipkart's operating losses to nearly double from its fiscal 2017 level of Rs 4,586 crore to Rs 9,111 crore by fiscal 2020.

Interestingly, Amazon had been considering making its own offer for the Indian firm as well, but it looks like Walmart beat them to it. This deal is a mechanism through which Walmart wants to control and dominate offline retail trade.

While Naspers has not divested from India, it has also not fully divested from Flipkart or for that matter, Walmart.

Flipkart's co-founder was equally upbeat on the deal.

Why is the Flipkart-Walmart deal so important?

In January this year, Amazon Seller Services had received a fund infusion of Rs 1,950 crore from the parent company.

Binny Bansal said Walmart is the ideal partner for the next phase of Flipkart journey. Last year, according to figures released by Forrester, the online retail market in the country grossed up US$21 billion.

Flipkart will also benefit from deep pockets of Walmart as well as the U.S. retail giant's decades of retailing expertise in skills from logistics to marketing.


With a huge user base, India looms as an attractive market for retailers.

USA e-tail giant Amazon has infused fresh capital to the tune of Rs 2,600 crore into its India unit, Amazon Seller Services, to strengthen the war-chest of the company against domestic rival Flipkart.

In China, Walmart has acquired a 12% stake in e-commerce player JD.com, and in Japan, it teamed up this year with Tokyo's Rakuten.

Meanwhile, the two former Amazon employees, Sachin Bansal and Binny Bansal, steadily grew Flipkart from the book-selling company they founded in a two-bedroom apartment in Bengaluru.

The first discussion regarding this happened between Flipkart and Walmart in 2016 and now as reported by various media agencies, Walmart has concurred to buy 75% share of Flipkart at a price of $15 billion or £11 billion.

Walmart for its part is promising to provide hundreds of jobs in India, work with kirana owners to modernize their practices, support small businesses, join hands with farmers, and lend a hand to Make in India projects.

"If there's one thing we can learn from the recent Flipkart saga, it's this: never count out Walmart". Walmart will retain a 42 percent stake in the combined company.

The move fits perfectly with Walmart's worldwide growth plan. However, his exit seems to have been driven by the fact that Walmart did not see a role for both the co-founders on the board of the e-commerce startup. With the integration of Jet in the U.S. well under way, Walmart has gotten better at rolling out new changes and incorporating these lessons into the core business. "Flipkart is key to a global e-commerce strategy", said Arvind Singhal, chairman of the New Delhi-based retail consultancy Technopak Advisors.

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