Amazon looking to buy India rival Flipkart

Amazon is in initial exploratory talks to buy Indian rival Flipkart. Meanwhile, Walmart is also in talks to buy 40 to 55 percent stake in the company.  

Apr 05th 2018

Nearly eight months after the merger talks between Snapdeal and Flipkart fell apart, its the news of Amazon- Flipkart doing the rounds lately. Seattle-based global rival Amazon is said to have held initial exploratory talks to acquire majority stake in Flipkart. Flipkart group owns fashion portals, Myntra, Jabong; payments company Phone Pe; eportal eBay India; and logistic arm Ekart other than its own shopping portal.  If Amazon does buy Flipkart, it will be consolidation in the ecommerce space, with two big players merging. From Flipkart’s side, negotiations are being spearheaded by Tiger Global’s Lee Fixel, according to a report by Mint. 

Flipkart was started in 2007 by Sachin Bansal and Binny Bansal. In the last 12 years the company has raised 18 rounds of investments and acquired 10 companies. Total funding in Flipkart has been USD 7. 3 billion. Currently, the company is making an annual loss of Rs 8771 Crore. The company also saw several markdowns in valuation in 2016 from its own investors. However, in its latest round of funding in August 2017, by Softbank Group for USD 1.4 Billion, the e-retailer was valued at USD 12 billion. 

In talks with Walmart as well 

Retail giant Walmart is also in talks to buy 40 to 55 percent of Flipkart. Walmart is looking at the deal in a bid to further increase its presence in India and create an online presence here to fight competition with Amazon. If the deal comes through, it is expected to value Flipkart at USD 21 billion. Currently, Walmart is present in 21 stores in India. On the other hand Amazon has entered the brick and mortar space by opening physical stores. Walmart has been acquiring startups to leverage their online capabilities and increase its online presence. There were also reports that  they were interested to invest USD 14 to15 billion in Flipkart. 

Amazon increases investments in India

Amazon has been constantly increasing its investments in India. Currently, it has committed to investing USD 5 billion in India. It is also aggressively expanding in the country by doubling warehouses and also adding newer segments such as groceries after last years new FDI norms. Interestingly, be it content or grocery, Amazon is looking at exploring segments where Flipkart entered and failed.  Also, focusing equally on the brick-and-mortar market here, Amazon bough 5 percent stake in retail giant Shoppers Stop last year.