One of Walmart’s primary goals for expanding in India is to take advantage of the country’s growing e-commerce and payments markets. The company has already invested over $2.5 billion in India since 2008, and it plans to increase this investment significantly in the near future as the economies of both countries continue to grow. Walmart applauds Prime Minister Narendra Modi’s efforts to promote digital commerce, and it believes that India’s large population and burgeoning middle class will make it an increasingly important market for the retailer.
Walmart’s decision to relocate its corporate headquarters to India has raised eyebrows at home, as many taxpayers have criticized the company for shifting its tax burden elsewhere. However, the retailer is continuing to invest heavily in PhonePe, a homegrown e-commerce player that Walmart owns a majority stake in. The $780 million paid earlier this month by Walmart to Indian authorities marks the third time this year that the company has transferred money overseas.
The news of Flipkart’s plans to buy back its shares from early backers Tiger Global and Accel Partners comes as a surprise, as the company had been touted recently as being on the path to becoming a global giant. Some observers say that the move may be an indication that Flipkart is struggling with its own growth, and not ready for Takeover talk yet.
The competition between Walmart and Amazon for market share in India has been intense. In the past year, Walmart has made significant inroads, thanks to aggressive pricing and its strong local presence. However, Amazon is still a major player in the market, with a sizable ecosystem of third-party sellers that support its marketplace operation.
Amazon and Walmart’s investment in India shows that both companies are willing to put money into a potential hot market. India is expected to be one of the fastest growing economies in the world, and as such, both Amazon and Walmart believe that it has significant future potential as an e-commerce destination.
UPI is the most popular payment network in India and PhonePe commands over 40% of all transactions on the network. Flipkart leads the e-commerce market in India, followed by Amazon.com and Snapdeal. UPI is important because it allows Indians to easily pay for goods and services online without having to use traditional methods like cash or credit cards.
Given Walmart’s recent efforts to bolster its business in India, Amazon’s strategy of streamlining its operations may be the more sensible move. While Amazon has not made as many headlines in India recently, it appears to be continuing to invest in its core e-commerce business. With a market size of over $100 billion and increasing consumer demand, both Walmart and Amazon will need to continue investing in their Indian businesses if they hope to remain competitive.
It is not clear what Amazon’s plans are for relaunching its Indian business. The company faced a very public setback in the country last year after India’s largest retail giant Reliance outwitted the American firm into securing retailer Future Group’s assets. Amazon went public with its frustration, but then entered the quiet mode. It is possible that Amazon is waiting for better opportunities to come along, or it may have decided that it does not want to compete with Reliance in India given their rivalry over e-commerce supremacy.
The absence of top Amazon managers from the company’s launch event for its air service in India has raised concerns about the division’s future in the country. The lack of management presence may indicate that Amazon is not as committed to air as it had been, and instead plans to shift focus to its other services such as Prime and cloud storage. This could be problematic for Amazon, given that air is a more difficult market to compete in with competitors such as Google and Alibaba.