Skip to comments.Walmart’s Big Bet Could Pay Off for India
Posted on 05/18/2018 2:06:56 AM PDT by Cronos
Walmart bet big on Indian e-commerce last week with its $16 billion purchase of a 77% stake in Flipkart. And while the jury is still out on the acquisition as an investment, one thing is clear: Its good news for India.
Walmarts share price fell 3% on the day of the announcement. Thats due to investors fears that the American giant overpaid for a loss-making retailer with annual sales of $4.6 billion in the year that ended March 31. Last year Flipkart, which has engaged in a discounting war with Amazon to attract customers, lost $1.29 billion.
But Walmarts belief in the Indian markets potential is well-founded. Only about 15% of Indians shop online today, according to the research firm Gartner. But rising incomes, a youthful population, and burgeoning smartphone sales are expected to power e-commerce growth. The market-research firm Euromonitor estimates that online sales will increase by about 28% per year for the next five years.
..Marrying Flipkarts knowledge of the Indian market with Walmarts grasp of logistics and distribution could create a new challenge to Amazon and boost efficiency across Asias third-largest economy. This, then, is the ultimate promise of Walmarts bet on India. If it pays off, shareholders will benefit. But more important, 1.3 billion Indians will get a powerful reminder that capitalism works.
(Excerpt) Read more at wsj.com ...
Walmart paid $16 billion for a web site? Insane.
Walmart already has their own website. What is the point in buying another website, with different name, for 16 billion? Indians can just go shop at www.walmart.com.
Walmart overpaid. If I were a shareholder, I would not be happy.
While Walmart beats Amazon hands down on retail outlets, it also offers an in store experience that engages the same visceral feelings prompted by the carnival. Lots of colors, lots of stuff visually. How that will work in the future remains to be seen. Walmart still regularly continues its earnings history.
There may not be much more potential left in the US market. Thus India is a good play especially at a time when China has not been playing nice.
Amazon offered $18B.
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