The much speculated US-based retail giants Walmart Stores Inc., collaboration with Flipkart the e-commerce portal for a minority stake around $1 billion has been put on hold. With the latest news pouring in the audit which was conducted by Walmart may have fallen through due to some noticeable inconsistency in Flipkart’s financial report.
Walmart Stores Inc previously tried the South American market with Bharti Enterprise in Mexico, but with the bribery scandal, the joint venture fell through. Walmart’s decision of this merger with Flipkart would have been beneficial for both Walmart and Flipkart followed by the collaboration which would help in expansion in the Asian market.
Walmart and Flipkart have a common rival Amazon, which is known to have upped its game by coming up with an investment in the Indian operations of $2 billion more making it be $7 billion, as it has already committed $5 billion. Therefore, Flipkart which is known to have a successful sale this year was looking for funding, and this is one of the reasons why the investment deal with Walmart might be taken up by them. However, according to sources, Flipkart have made a pre-tax loss of Rs29.8bn on revenue of Rs102bn in the financial year ending March 2015-16. With New Delhi government providing the route to Walmart into the retail sector, this investment deal with Flipkart would have been apt for Walmart.
Walmart is known to have invested in JD.com which is the second largest marketplace in China and has acquired a US-based Jet.com for $3.3 Billion. Therefore they wanted to reach out to the Indian market with its investment deal with Flipkart. With the belief of the analysts, Flipkart has been steadily losing market share to Amazon. Even though Walmart investing in Flipkart was going to be beneficial for the consumers who would have availed the best standard of ecommerce service with Flipkart, this investment deal due to some unavoidable circumstances has fallen through.