Kishore Biyani admitted Walmart buying Flipkart can change the game in consumer durables and IT products.
Walmart shares fell Wednesday as the USA retailer announced it would purchase a controlling stake in Indian eCommerce business Flipkart.
In an interesting twist, this time Walmart is snapping up a company started by none other than two former Amazon employees.
Google parent Alphabet Inc is seen to be the potential investor who may get as much as 15 per cent.
Flipkart truly upheld audacity and customer centricity and I got to work with the best people. Walmarts Krish Iyer will be the CEO of the Bengaluru-based firm.
"This may seem like a one-off acquisition in a faraway land, but Indian e-commerce is without a doubt going to be a focus for Walmart".
SoftBank made a 60% return, netting $ 4 billion on a $2.5 investment made in August 2017, as we mentioned earlier.
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Flipkart rejigged its management and Binny took over as CEO.
The deal is subject to regulatory approvals including Competition Commission of India, and is expected to close later this year.
In March, Meena forecasted that India's online retail market remained the fastest-growing market in the world. Therefore, an ironic outcome of this deal is that Indian consumers are going to be subsidised by Walmart's American shareholders even as the United States government challenges India at WTO over its subsidies to farmers and exporters. Walmart once envisioned operating hundreds of locations across India but it has been unable to open traditional units because of long-standing governmental rules for so-called multibrand global retailers. Walmart has tried to make a bigger push into apparel online with acquisitions like Bonobos and ModCloth, along with a partnership with department-store chain Lord & Taylor. It could potentially use those Best Price stores as pickup and delivery points.
The reason behind the interest of Walmart in this deal is probably due to the fact that by some predictions, India is the upcoming major market in the field of e-commerce and this market is assumed to grow by almost 1/3 and reach a level of $50 billion.
Livemint, meanwhile, reported that $500 million has been set aside to buy back shares from current and ex-Flipkart employees, making it the biggest ESOP (employee stock options) buyback in the Indian startup arena.
Importantly, according to media reports, he has already met Amazon's Jeff Bezos, Walmart and Alibaba to discuss various business opportunities with them. "I am a very strong believer of the fact that the Indian market is so large that nobody can say it will saturate", he said. Last year, according to figures released by Forrester, the online retail market in the country grossed up US$21 billion.
Walmart still tried to enter India via a wholesale model, with Bharti Enterprises in India, but terminated the deal after a $151m loss.
"eBay has notified Flipkart and Walmart that it intends to sell its holdings in Flipkart, which will represent gross proceeds of approximately $1.1 billion", eBay said in a statement.