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Walmart set to invest up to $1 billion in Flipkart
Last updated on Sep 29, 2016, 06:05 pm
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American retail giant Walmart Store Inc. is in talks to invest up to $1 billion in the Indian e-commerce website Flipkart.
The investment would translate into Walmart acquiring a minority stake in the Indian company.
The investment talks come in the wake of rising competition between e-commerce companies for supremacy in the market.
The terms of the deal were not specified.
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About
Flipkart
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Flipkart is one of India's biggest e-commerce players, with its massive online platform valued at over $15 billion.
The company was founded nine years ago, by ex-Amazon employees, Sachin Bansal and Binny Bansal.
Currently headquartered in Bengaluru, Karnataka, the company has clocked revenues of over $1.5 billion last year.
Famous e-commerce portals for fashion like Jabong and Myntra are owned by Flipkart.
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Competition
Flipkart's rising rivalry with Amazon
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When Amazon entered the bustling Indian e-commerce market in 2013, the stiff competition has forced rising rivalry amongst the companies.
With billions of dollars in investments and a multitude of investors' stake at hand, Flipkart and Amazon are at a constant battle to gain greater market share.
Apart from launching mega sales, they continue to battle for exclusive selling rights for different products.
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29 Sep 2016
Walmart set to invest up to $1 billion in Flipkart
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American retail giant Walmart Store Inc. is in talks to invest up to $1 billion in the Indian e-commerce website Flipkart.
The investment would translate into Walmart acquiring a minority stake in the Indian company.
The investment talks come in the wake of rising competition between e-commerce companies for supremacy in the market.
The terms of the deal were not specified.
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Quote
Analysts highlight Flipart's growing need for partnerships
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"With its main competitor Amazon getting very aggressive, Flipkart needs a solid partner to bolster its operations with not just capital but also branding, logistics, sourcing and other retail experience, they won't be able to pull it off with small partners."- Devangshu Dutta, Third Eyesight.
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Investment benefits
How will the Walmart investment help Flipkart?
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Flipkart, pitched to be India's largest online retailer, has come under fire with Amazon stepping up investments in India.
Amazon has made investments nearing $5 billion in India till date.
The deal would help inject Flipkart with massive capital to rival the American e-commerce pioneer.
It would also help the company boost its market share, which is currently dominated by Amazon.
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Information
Flipkart's cushion against rising losses
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The $1 billion capital injection for Flipkart would provide ample support for the company to withstand further losses. Flipkart's losses amounted $448 million in 2015. The investment would be its first after July last year when it raised $700 million.
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Investment gains
Walmart: Gaining an Indian foothold?
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Walmart, based at Arkansas, has been battling Indian regulations to gain a strong foothold in the country.
India is touted to be one of the world's largest retail markets, after U.S. and China.
Walmart had previously ventured into a joint partnership in India with Bharti Group in 2007, but the business failed.
The Flipkart investment would help Walmart foray into India's e-commerce market.