Walmart buys controlling stake in India’s Flipkart

By Barry Eitel

SAN FRANCISCO (AA) – Walmart announced Wednesday that it has bought a 77 percent majority stake in Flipkart, India’s largest online retailer, for $16 billion.

The controlling stake will set Walmart, the largest retailer in the world, in a more prominent position to battle its rival Amazon in the worldwide e-commerce space.

“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,” Walmart Chief Executive Doug McMillon said in a statement.

“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.”

Flipkart, founded in 2007, sold $4.6 billion worth of goods in the fiscal year ending in March, more than a 50 percent increase from the previous year.

The growth of Flipkart, which sells some 80 million different products in more than 80 categories, followed the burgeoning growth of India’s economy over the past decade.

Home to 1.3 billion people, India has seen the size of its middle class surge. Analysts believe more than 500 million Indians will be online by the end of 2018 – Flipkart said that its delivery business, eKart, serves more than 800 Indian cities and makes some 500,000 deliveries every day.

“This investment is of immense importance for India and will help fuel our ambition to deepen our connection with buyers and sellers and to create the next wave of retail in India,” Flipkart co-founder and CEO Binny Bansal said in an announcement.

“While e-commerce is still a relatively small part of retail in India, we see great potential to grow. Walmart is the ideal partner for the next phase of our journey, and we look forward to working together in the years ahead to bring our strengths and learnings in retail and e-commerce to the fore.”

Investors appeared less than thrilled with the purchase, with Walmart stock closing Wednesday down 3 percent at $83.06. Shares of Amazon grew slightly, boosting the stock 1 percent to close the day at $1,608.