Alphabet to contribute $3 billion in the deal of Flipkart takeover

Absolutely it has proved again by the battleground in the space of e-commerce. It is among the top US based multinationals outside of USA between Walmart and Amazon, each of which lost out on the world’s largest e-commerce market - China.

There are other significant shareholders in the company include early investor Accel Partners, South African media conglomerate Naspers and US-based online marketplace eBay. Walmart and Alphabet are seen joining forces once again as they seek to take on Amazon’s growing retail clout, this time in a market outside the US. 

Walmart will acquire about a 60 percent stake in Flipkart, while Alphabet will get a roughly 15 percent stake in the online marketplace for about $3 billion, one of the sources said. US retailer Amazon is Flipkart’s largest online competitor in India, though Flipkart has the biggest market share. Amazon was also reportedly interested in a Flipkart buyout, which would give it control of around 90% of the market. If the Walmart deal goes through, however, Amazon and Flipkart would remain competitors - which would likely be the best result for consumers.

The sources indicated that Walmart had valued Flipkart at between $20 and $22 billion. Google’s parent company Alphabet Inc. is said to be participating in the deal with a $3 billion investment. Walmart would maintain a focus on the grocery market, said the sources, suggesting that almost 50% of Walmart’s initial investment would be funneled into building a food and grocery supply chain.

As part of a partnership forged in the US last year, Walmart products are sold on Google Express, the tech giant’s online mall. Google also offers personalised voice shopping for Walmart products online. To give a competition to Amazon, Google has similar product like,Consumers can also place orders for Walmart products by speaking them out to Google Home devices. A question comes will this module is going to work in India, since, in rural India consumers prefer to buy from the open market. Hence, the go-to-market strategy has to be much different here.

Flipkart chief executive officer Kalyan Krishnamurthy, who was brought in by Tiger Global Management in 2016, is likely to remain in his job for now. Walmart is also negotiating with Flipkart cofounders Sachin Bansal and Binny Bansal (unrelated) to buy their stakes, but a expert says, if both are out from this deal after they sell their stake,it may not good for the business to run in India.  Walmart is also negotiating with Flipkart cofounders Sachin Bansal and Binny Bansal to buy their stakes, but a final decision has not been taken.



Walmart may also explore the option of listing the Indian unit as it did in Mexico. 
This will also help in price discovery in case some investors chose to exit through that route. 


Opportunity seems very promising :

India, with a population of 1.3 billion that is expected to surpass China’s in the coming years, has become a must-dominate arena for the two e-commerce giants as they seek to grow their international networks. The growing population comes as opportunity to serve in better way. Walmart wants to gain a stronger presence in the food and grocery segment in India. As per the report, India’s consumption data. The retail market is expected to hit $1.1 trillion in 2027 from $420 billion in 2016, .

A sources said, Flipkart will hold a townhall for employees on Friday, with Walmart CEO Doug McMillon likely to attend, one of the sources said. Other top Walmart executives will also be in India for the announcement.