Walmart trails Amazon in the race for Indian online shoppers

Walmart benefits from the contested $16 billion Flipkart deal when conducting online business.

Walmart, a US retailer famous for selling cheap goods in unassuming shops, is outpacing Amazon in the race for Indian internet shoppers. For a US corporation, this is a rare e-commerce triumph. Walmart made the most expensive e-commerce deal in history in 2018 to enter the Indian market. Walmart spent $16 billion to purchase a 77 percent stake in Flipkart, an online retailer founded by former Amazon employees in the country with the greatest per capita income. Analysts questioned the acquisition because of Flipkart’s losses and restrictions aimed to protect conventional retailers in India. The fact that Walmart decided to pay top dollar for the Indian chance is validated by Flipkart’s long-term success. Did Walmart overpay for Flipkart at the time? Yes.

But did they succeed in getting value for their money in the years that followed? The first institutional investor in Flipkart, Abhishek Goyal, co-founder of the data startup Tracxn and a former executive at Accel Partners, replied in the positive. The only other established ecommerce company that may help Walmart compete with Amazon on the global marketplaces is Amazon. The only useful asset was Flipkart. Flipkart’s valuation rose to $38 billion in 2021 when it raised an additional $4.8 billion in stock, including an undisclosed sum from Walmart and investments from firms including SoftBank of Japan and Singapore’s sovereign wealth fund GIC.

Recommend your favorite products and earn money from Flipkart
Recommend your favorite products and earn money from Flipkart

India became become a critical battleground as Walmart and Amazon struggled to compete in China against local companies like Alibaba Group and Similar occurrences took occurring in other quickly emerging Asian markets, where companies like Shopee and Lazada in Singapore, as well as Tokopedia, Blibli, and Bukalapak in Indonesia, revealed to be formidable competitors. Indian ecommerce sales are anticipated to double to $135 billion between 2020 and 2025, almost matching south-east Asia, according to Bernstein research. Despite the fact that neither Walmart nor Amazon make money from their online businesses and that both have recently lost some market share to more active local companies like Reliance Industries and the Tata Group, Walmart is still considered as the industry leader in India because to the Flipkart acquisition. In contrast to Flipkart’s 48% market share from the previous year, Amazon had a 26% market share, according to research firm Redseer Strategy. In India, Flipkart produced gross sales of $23 billion in 2021, compared to $18 to $20 billion for Amazon, according to Bernstein’s predictions.

Redseer’s figures show that Flipkart has grown more quickly in India than Amazon. It predicts that Flipkart’s gross sales will rise by 40% and 23% yearly in 2021 and 2022, respectively. The research states that Amazon had comparable numbers of 26% and 10%.

Mrigank Gutgutia, partner at Redseer, predicts that Amazon would find it very difficult to catch up to Flipkart in the near future. “Amazon has a significant gap with Flipkart and, potentially, the gap could become larger,” he claimed. Despite claiming that “the data about Amazon” in the Redseer study is “not correct,” Amazon continued to be coy about its estimates for its market share in India. It said, “Amazon is the most well-known and trustworthy online retailer in India.

Customers from all around the country rely on Amazon to purchase the goods they need from categories such as telephones, gadgets, clothing, cosmetics, home goods, and basic necessities.

We are excited about the future of our business in India and remain dedicated to serving and innovating for our customers, retailers, partners, brands, and employees. Regarding the growth of its sales and market share, Flipkart won’t comment. Industry watchers noted that Flipkart has carved out a niche in tiny towns and cities thanks to its enormous assortment of inexpensive goods and offerings comparable to Shopsy, an app created in 2021 to target value-conscious shoppers with exceptionally low costs. It also owns Myntra, a renowned clothing e-tailer. Amazon has become more well-liked among affluent urban Indians as a result of Prime, a monthly subscription service that offers faster deliveries, savings, and video streaming. In June, Amazon will mark its tenth anniversary in India. Redseer estimates that by 2022, the apparel, electronics, appliances, and mobile phone sectors will account for approximately 70% of the Indian online retail market, leaving Flipkart behind. Both of them fall short of BigBasket from the Tata Group in terms of grocery sales.

“The problem for Amazon is that even their Prime subscribers shop fashion from Myntra and groceries from BigBasket,” said Satish Meena, an independent e-commerce consultant. “Amazon Prime subscribers weren’t supposed to become trapped customers, but that hasn’t happened yet. Both Walmart and Amazon have made significant investments to expand their presence in India, occasionally going up against one another. In July 2014, Flipkart reported the largest fundraising attempt by an Indian start-up to date: $1 billion. The following day, Amazon revealed $2 billion in funding. Money has been spent on the rivalry. Losses at Flipkart Internet, which operates its marketplace, rose by 51% to 43.62 billion rupees ($532 million) in the fiscal year 2022.

Losses at Amazon Seller Services, which runs its Indian marketplace, were 36.49 billion rupees, which is a reduction of 23.1% from the prior year. After failing to mention India for the first time in five years in its April earnings release, concerns were raised about Amazon’s commitment to the nation. Due to sluggish sales growth, Amazon is laying off 27,000 people worldwide and has closed its nascent activities in India for wholesale distribution, book publishing, online education, and food delivery. “Amazon is not pumping too much money, (but) they are not starving it (India operations),” claimed Tracxn’s Goyal. “They are sort of letting the situation play out.” The American owners of Flipkart have been committing to continuing operations in India. In February, Walmart International CEO Judith McKenna said to analysts, “The fundamentals of India remain strong and, in fact, it’s strengthening all the time.” In February, Walmart International CEO Judith McKenna said to analysts, “The fundamentals of India remain strong and, in fact, it’s strengthening all the time.”

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