- Walmart acquired Flipkart in May 2018 for $16 Billion.
- Amazon and Flipkart were neck to neck in terms of GMV in 2017
- Flipkart has burnt $1 billion since the acquisition by US retail giant Walmart
Indian e-commerce giant Flipkart owned by Walmart has burned almost $ 1 billion after US retail giant acquired a majority in it, as shown in the regulatory filings in aggressive attempt to fight rivals Amazon’s control over India’s online marketplace. Last Week, Walmart disclosed in regulatory filings that Flipkart had cash and cash equivalents of $1.2 billion on its books as of April 30, less than the $2.2 billion the Indian Company held in August 2018 when the US giant invested $16 billion for a 77% stake.
Walmart stated $2.7 billion in cash globally was not freely transferable to the US, “Approximately $1.2 billion was accessible through dividends or intercompany making arrangements subject to the approval of the Flipkart minority shareholders,” the regulatory filing stated. Walmart plans to utilize this essential cash to fund operations at the Indian entity to cut the losses.
As disclosed in March by Walmart, Flipkart possessed $2.2 billion in cash and cash equivalents in August 2018, a part of the $24.1 billion assets of the Indian company at the time of acquisition.
77% of Flipkart assets were attributed to intangibles and goodwill by Walmart, highlighting the investment US retail giant has done to get a hold in India’s E-commerce Market.
Flipkart is involved in a high stake battle with its rival Amazon, which has invested in close to $5 billion in its Indian entities. Both companies are investing close to $1 billion to attract new buyers through discounts and their expansion.
The rivalry is at its peak during their annual flagship sales Big Billion Days and Great Indian Festival. As per industry estimates, Flipkart grossed $1.1 billion in Gross Merchandise Value (GMV) as compared to last year’s $660 million while Amazon India sold goods worth $700-$800 million in 6 days during their Great Indian Festival almost double of what they earned last year $380 million.
A report by Barclays of Financial Year March 2018 showed that Amazon outpaced Flipkart in Gross Merchandise Value (GMV) with $7.5 billion as compared to $6.2 billion of Flipkart.
But Flipkart still manages to beat Amazon when it comes to revenue. ($3.8 billion vs $3.2 billion), although Amazon is growing faster with a growth rate of 82% as compared to Flipkart which has 47%.
Both of the rivals have invested a lot in Indian E-commerce space which is estimated to grow to $40-45 billion in 2020. With the increase in the number of internet users, E-commerce users are expected to be double in the country from 80-90 million in 2017 to 180-200 million in 2020.
Will Amazon India maintain its position or with the entry of Walmart, Flipkart will be ousted its competition? Will Paytm be able to gain a substantial share in Indian E-Commerce Space?