Amazon Could Make Competing Bid For Flipkart, But Odds Are Low

Amazon could make a rival offer for Flipkart, the India-based eCommerce company that is in talks with Walmart about a deal.

Reuters, citing local media, reported that while Amazon has had talks about purchasing a controlling stake in the leading eCommerce company in India, a deal between Flipkart and Walmart is still seen as the likely outcome. Reuters cited Mint, the daily newspaper in India. Meanwhile, a person familiar with the matter told Reuters that a deal with Amazon had low odds because it could spur concerns that it would create a monopoly, as the two are already the leading online retailers in the country.

For Walmart, if the deal to purchase more than 40 percent of Flipkart goes through, it could be one of the retailer’s largest overseas acquisitions. It would give it access to what Morgan Stanley has said will be a $200 billion market in the next decade, noted the report. It would also mark a big challenge to Amazon’s dominance in the country. The Seattle, Washington eCommerce company has already pledged to invest $5 billion in India.

Reuters reported that Walmart will pay for the stake with a mix of primary and secondary share purchases, with Flipkart getting a valuation of around $21 billion as a result. Flipkart has around 40 percent of the eCommerce market share in India and is currently ahead of Amazon. Because of its successes, it has attracted investors with a lot of cash and tech know-how — hedge fund Tiger Global Management,  eBay, Microsoft and Tencent are among its investors.  For Flipkart, a deal with Walmart will help it push back from the challenge Amazon is mounting. Amazon recently revealed plans to launch private label brands in the country, with Amazon India Vice President Manish Tiwary saying it is hoping to launch new product categories to fill holes in the offering. “We have selection gaps in every category … our large vendors on the private labels side, we’ll keep on filling the gaps using them,” the executive said in a recent interview with Livemint.