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Friday, 11 May 2018

India: a good market for Walmart

Por olimurs.92

Since 2016, Walmart and Amanzon, the two giant American companies, were contesting the control of Indian online sales company Flipkart. The fight was finally won by Walmart, which recently acquired 77 percent of the Indian company, founded in 2007, for 16,000 million dollars. With the purchase, the American company acquired a potential market of 1.300 million inhabitants, in a country where online commerce grows unstoppably.

Can you imagine it? With this purchase Walmart assumes most of a company that makes 500,000 daily deliveries of products in the second country with the most inhabitants of the planet. India is emerging as a promising niche market for online sales thanks to a large young population with new consumer behavior. A society marked by growth, with a notable increase in the Internet connection, especially through smartphones.

However, the shares of the American company fall close to 4% (around 82 dollars) and its performance in the stock market in 2018 has not been good, as it lost a 16.6 percent and its S & P 500 index almost hasn’t varied its value. On the other hand, Amazon has risen more than 36% in the same period.

Walmart CEO Doug McMillon said in a statement that the investment is an opportunity to collaborate with the company, which leads the transformation of electronic commerce in the market. This is considered the most expensive operation of Walmart's 55-year history. Some of the partners with whom Flipkart shares will be multinationals such as Tencent, Microsoft and Tiger Global Management.

According to Binny Bansal, president and co-founder of Flipkart, this investment is considered of great importance for India as it will help increase the success of the site. As part of the agreement, Walmart will inject 2,000 million dollars into the Indian company, with the aim of strengthening itself against Amazon, which has been operating in the Asian country since 2013.

Flipkart was founded by two former employees of Amazon, so the victory has an even sweeter flavor for Walmart’s creators. Although they are not the only one who will celebrate the agreement: one of the founders de Flipkart, Sachin Bansal, has earned between 800 and 850 million dollars by selling his full part in the business, which amounted up to the 5.5 percent of the company.