India is the new battleground for the tug of war going on between Amazon and Walmart for dominance over online and offline retail markets. Walmart recently announced their decision to buy Indian e-commerce giant Flipkart for a whopping $16 Billion, the biggest e-commerce player in the Indian market. Now Flipkart faces tough competition from the Indian arm of US-based giant Amazon, which has told its shareholders that their Indian business has the fastest growth rate among their subsidiaries, and is planning to pump another $5 billion into the Indian market. Amazon and Walmart are fighting for dominance over the Indian retail market.
Company profiles:
Walmart was started in 1969 by Arkansas based businessman Sam Walton. The company runs 11,718 retail stores across the world. The 5 decades old company is now the world’s largest company in terms of revenue, with an annual turnover of around $500 Billion. Sam Walton, who died in 1992, is considered to be one of the most successful businessmen the world has produced. His family fortunes are estimated to be around $150 billion today.
Amazon on the other hand was started in 1994 by US-based techie Jeff Bezos to sell things over the internet. Today it is the world’s largest Internet-based retailer and is popularly called the “Walmart of the Web”, while Jeff Bezos is hailed as the “Sam Walton of the Internet Age”. Jeff Bezos is the third richest person in the world with an estimated worth of around $72 billion.
Amazon and Walmart’s fight
The first shots were fired when Amazon started acquiring brick and mortar retail stores like ‘Whole Foods‘. To remain in competition, Walmart also started acquiring online stores like Jet.com, Shoebuy, ModCloth etc. Amazon and Walmart are two of the most successful companies in the world and neither of them wants to lose the fight.
Apart from the American turf, these companies have now taken their war to the emerging markets of developing countries as well. They entered China but both of them were pushed out by Chinese e-commerce giants like Alibaba and Tencent. They also failed to make an impact on the European market due to the strong presence of local players like Carrefour in France, Metro in Germany and Tesco in United Kingdom. The next battleground for them was Latin America where Walmart has the upper hand over Amazon due to the lack of internet connectivity in many parts of Latin America. With Walmart’s acquisition of Flipkart, the war has finally come to the Indian battlefield.
The battle for the Indian market
Walmart was the first to move into the Indian market between the two companies. It entered the Indian market in 2009 in a joint venture with Bharti Airtel but the company could not grow due to corporate governance issues. Its financial sheet remained in red since its inception. Amazon entered the Indian market in 2012; the company is growing exponentially in India and it is the fastest growing unit of Amazon in the world.
Walmart’s acquisition of Flipkart
Walmart announced that it will be acquiring 70% stake in Flipkart (which owns Myntra, PhonePe and Jabong), in partnership with Alphabet Inc.(parent company of Google). Walmart and Google are Amazon’s rvials and want to edge out Amazon from the Indian market.
This deal is bringing another global player into the Indian market. The competition in pricing between Amazon and Walmart will be profitable for the Indian consumer, who will end up getting cheaper products. Unfortunately, this also means that the two largest players in the Indian market will now be foreign companies. Both of the companies are infamous for abysmal working conditions for their workers. Although Flipkart owners Sachin Bansal and Binny Bansal will end up being billionaires with this deal, a company handcrafted in India will now move into foreign hands.