Walmart makes $16B bet on India’s economy
NEW YORK — Walmart will soon reach shoppers in India’s massive consumer market directly, as it takes control of the online retailer Flipkart that’s known for its ubiquitous delivery drivers on motorcycles with oversized backpacks.
The $16 billion controlling stake, announced Wednesday, is the largest acquisition yet by the world’s largest retailer.
India’s hot economy makes it attractive to companies eager to sell goods to its massive population. Walmart and Amazon have pushed hard to catch up to Flipkart and to establish a substantial foothold in the country.
But instead of competing with Flipkart, Walmart has essentially taken over the company. It’s a move that might have nearterm losses but is part of a larger shift by Walmart to look toward the future. That includes its decision last month to sell its British unit, Asda, which primarily operated a chain of traditional supermarkets. Amazon, which operates an online marketplace in India, was reportedly in talks with Flipkart as well — but Walmart won it.
Flipkart had net sales of $4.6 billion in its latest fiscal year. That’s a fraction of Walmart’s latest annual revenue of $485.8 billion. But Walmart believes India, which has 1.3 billion people, could be among the world’s top five e-commerce markets within the next five years.
“We are actively working to shape the portfolio of geographies and businesses we’re in, in order to set the company up for success for another generation,” Walmart CEO Doug McMillon said in a conference call Wednesday.
Flipkart is, in some ways, an echo of Amazon. Founded in 2007 by two college friends and former Amazon employees, Flipkart began life as an online bookseller.