Japans SoftBank Group Corp sold its 20 per cent stake, which it had acquired for Dollars 2.5 billion, for about USD 4 billion. South African tech giant Naspers, on other hand, has made a complete exit from the company after selling its entire 11.18% stake to Walmart for $2.2 billion.
Amazon is also investing significant money in marketing and promotions as the company looks to bring more consumers to its online shopping platform. However, Walmart will try to keep Amazon off Flipkart by partnering with Google's parent company Alphabet. This will make Walmart be a part of local deals across India.
SoftBank, Flipkart's largest investor before the deal, will also completely exit the company.
The deal is subject to regulatory approvals including Competition Commission of India, and is expected to close later this year. Although India's population is rapidly coming online, the number of people with enough income to shop online is still tiny.
Flipkart has had its fair share of challenges over the past few years despite being a hit among Indian consumers. Walmart has tried to make a bigger push into apparel online with acquisitions like Bonobos and ModCloth, along with a partnership with department-store chain Lord & Taylor. "Flipkart is key to a global e-commerce strategy", said Arvind Singhal, chairman of the New Delhi-based retail consultancy Technopak Advisors. It could potentially use those Best Price stores as pickup and delivery points.
Flipkart Walmart Deal: Flipkart was quite liberal in granting stock options to employees. "So, I wanted to write to you personally to celebrate the news, fill you in on what this investment means, and whether there are going to be any changes in your relationship with Flipkart", he added. Although Flipkart is now the market leader, Amazon's Indian site, which only launched in 2013, is catching up quickly.
The deal all but assures an ongoing global rivalry between Walmart and Amazon.
According to Forrester Data, the Indian online retail market is around $20 billion in 2017 (2.4% of total retail market in India), which is still relatively small when compared to the penetration rates of other mature markets.
Sachin and Binny, who are not related and formerly worked for Amazon.com Inc, like their United States rival began by selling books when they founded Flipkart. This deal is a mechanism through which Walmart wants to control and dominate offline retail trade. The $16 billion deal which will give Walmart a 77% stake in Flipkart is being closely scrutinised for its tax implication and political implication following protests by Swadeshi Jagran Manch.