Walmart Eyeing Stake in Flipkart Marketplace

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Walmart is making moves against Amazon again—this time in India.

The world’s largest retailer is working on a deal to take a 15 percent to 20 percent stake in the $14.2 billion Flipkart e-commerce marketplace, according to India’s Economic Times newspaper.

Working off of information obtained from unnamed sources, the publication said a deal could come as early as March.

If the transaction takes place, it would give Amazon even more competition as it races to catch up with—and overtake—Flipkart in that market.

Though neither company has commented on the potential deal, the sources said both Walmart CEO Doug McMillon and Marc Lore, head of its e-commerce business in the U.S., joined incoming Walmart International CEO Judith McKenna at Flipkart’s offices last week.

A Flipkart/Walmart deal would allow both companies to better compete against Amazon in India. For Walmart, the upsides of the deal would include access to the marketplace database, one of the sources said.

Of particular interest to Flipkart would be Jet.com’s dynamic shopping basket, which adjusts item prices based on consumers’ spend, their form of payment and whether they agree to make the purchase a final sale. Speaking at the NRF Big Show in New York this month, McMillon credited this smart cart technology with being a big part of the big box company’s interest in Jet in the first place. Even before implementing the innovation on its site, which it will this year, Walmart saw a 50 percent boost in online sales post-Jet acquisition.

[Read more about Walmart’s emerging technologies: See How Walmart is Positioning to Move at the Speed of Innovation]

Teaming up with Walmart might also help the Indian marketplace tackle online groceries, which is a challenging—but potentially lucrative—segment to master. Retailers around the globe are attempting to figure out how to meet the demands to deliver fresh food fast on razor thin margins as a way to command more of shoppers’ online spend.

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“The common sourcing once the potential partnership goes through would lead to a win-win situation for all stakeholders in the value chain starting from Indian farmers, local suppliers and consumers,” one of the sources noted.

It’s the same code Amazon is attempting to crack with its acquisition of the Whole Foods chain in the U.S. plus its Fresh grocery delivery and pickup services.

In India, Amazon has reportedly invested $1.3 billion in Amazon Seller Services since the beginning of last year. The Times reported the company is spending $120 million a month on e-commerce and Prime subscription services to gain more customers and marketshare.

“Amazon’s (cash) burn is increasing due to push in three categories—smartphones, fashion and grocery,” Satish Meena, senior forecast analyst at Forrester Research, told the publication. “As its burn increases, it will see more infusions. In fact, 2018 will see both Flipkart and Amazon spending a lot on offline strategies.”

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