It is quite surprising to see that Flipkart has approached an American brand like Wal-Mart to fight out their American competitor Amazon. The source of this news is Wall Street Journal and they say that this update is from a person familiar with the investment. Since 2013 Flipkart is fighting out Amazon to become the market leader. Flipkart’s founders are ex-employees of Amazon and they replicated their previous employer’s model in their startup.
Wal-Mart on the other hand is trying to lobby their way into Indian retail market segment since 2008. In 2013 they finally gave up their idea to build supermarkets in the second largest populated economy, India. They have wholesale stores but they are not allowed to sell to consumers directly. Back in their home country Wal-Mart too is competing with Amazon. Amazon’s revenues are approximately $107 Billion while Wal-Mart is struggling at $14 Billion. Wal-Mart is generating $450+ Billion is revenues from both online and offline tough.
Flipkart is getting devaluated with time, from 15 Billion USD to 7 Billion and reducing. They are also running out of treasure thanks to deep discounting on every product to acquire customers. Existing investors refused to participate in new funding rounds. Flipkart needs investors with huge pockets to stay in this game, while investor funding in e-commerce space has reduced to the extent of nil. Not sure why Amazon wants to fund an Indian ecommerce company? The top reason could be, Wal-Mart wants to learn Indian e-commerce space with this Billion dollar investment.
With Amazon to invest more $3 Billion in India, Wal-Mart’s $ 1 Billion investment can help Flipkart to turn the game around before Diwali. Personally I feel e-commerce companies’ will always dry up investor funds till completion stops giving discounts. Looking at the e-commerce scenario in India it is advisable for e-commerce startups to come up with an idea that is way different from existing players. Read more Startup News.