Wal-Mart Stores is seeking to pay as much as US$1 billion for a share of India’s Flipkart Online Services to counter Amazon’s foray into the fast-developing eCommerce market.
Under a proposed agreement, reported by both Bloomberg and the Wall Street Journal, the world’s largest retailer would take a minority Flipkart ownership. Insiders say the terms have not yet been finalised for the deal, which follows on the heels of Amazon CEO Jeff Bezos announcing plans to spend a further $3 billion in India.
India’s largest online retailer, Flipkart is worth about $16 billion, according to research firm CB Insights.
India’s online market will expand at an average of 45 per cent annually in the next four years and reach $28 billion by 2020, according to estimates from Kotak Institutional Equities.
Wal-Mart first established a retail joint venture in India with Bharti Group, which runs the country’s largest telecommunications organisation, Bharti Airtel. Eventually Wal-Mart sold its stake to its partner.
Meanwhile, Amazon has been making major investments in infrastructure and partnerships in India, so far costing about $2 billion.
Wal-Mart last month agreed to buy US eCommerce company Jet.com for about $3.3 billion, and put founder Marc Lore in charge of the combined company’s online business.