Can Flipkart and Walmart take the fight to Amazon in India?

It is turning out to be a tough year for Flipkart. The investors have continuously lowered the valuation of the company from an all-time high of $15 billion in July 2015. The days of ‘If you are willing to sell diapers online, an investor will provide the funds’ are gone. The e-commerce industry in the nation is growing without a doubt but the investor mood isn’t aligned to this growth. The underlying reason, which always existed but is being thought of rationally today is the massive cash burn by these e-commerce portals. What makes it worse for Flipkart is its inability to have a stable leadership. If all this isn’t enough, as per a study by Office Chai, Amazon is eating into Flipkart’s market share. Though they make use of Google Trends to display this data, it shows a good picture about which e-commerce site people are searching for in India.

The charts paint a horrid picture for Flipkart in 2016 with Amazon increasing its penetration month on month. Here is the Google Trend map of India for most searched e-commerce site in India for 2015:

Google Trend - ecommerce website search india

Flipkart ruled the nation in terms of search engine traffic in 2015. Now let’s take a look at the data of 2016:

Google Trend - ecommerce website search india 2016

That paints an entirely different picture when compared to 2015. Amazon has captured most parts of west and central India as Flipkart’s search trend is declining. If this isn’t bad enough, the data of the last 90 days is probably the one that will make you sit up and wonder what is going to happen to Flipkart in the months to come.


So what’s Flipkart going to do next? How can it prevent Amazon from sweeping away it’s share in the e-commerce space in India?

While there is a lot at stake for the investors and the employees at Flipkart (if not the founders), one news coming out is that Walmart is exploring equity partnership with Flipkart. As reported by ET Tech, the world’s biggest retailer is looking to partner up and take on a common enemy in the form of Amazon. One thing that is common between Flipkart and Walmart is that Amazon has been eating into the market share of both these companies over the past few quarters if not years. Walmart posted about $14 billion in e-commerce sales in 2015, behind Amazon’s $99 billion revenue from online sales. Till the time there is an official confirmation (both Flipkart and Walmart denied commenting on ‘speculations’), nothing can be said but a lot can be speculated.

Interestingly, Walmart did forge a similar deal in China with where it acquired a 5% stake in the e-commerce marketplace for $1.5 Billion. is the second largest e-commerce portal in China. Also, looking to up its online presence, Walmart in August acquired in the US, a startup gaining popularity among young urban shoppers, for about $3.3 billion in the largest-ever purchase of an e-commerce company.

What’s in it for Flipkart?

If there are talks going on or not, Flipkart does stand to gain a lot from this particular deal if or when it happens. Walmart is famed for having the best supply chain which Flipkart can leverage to increase efficiency in procurement, product assortment and further improve its technology platform.

Also, Walmart’s chain of wholesale stores in a number of tier 2 cities around the country can be used as pick up and drop points by Flipkart which will help it get the orders delivered faster and further penetrate into the tier 2 cities. Few cities where Walmart has wholesale stores include Jammu, Chandigarh, Guntur, Lucknow and Agra.

What’s in it for Walmart?

On the flipside, given that Walmart cannot sell directly to consumers (given the retail policy and FDI norms in the country), e-commerce is the best bet that Walmart has. Since 100% FDI is allowed in e-commerce marketplace, it is an option Walmart can easily explore. Also, Walmart wouldn’t have to start operations from scratch in a country it has no footprint in the e-commerce space.

While Flipkart already has a plethora of investors including Tiger Global, Qatar Investment Authority, DST Global, GIC, Naspers, Accel Partners, Morgan Stanley and T Rowe Price, a partnership with Wallmart will certainly go a long way in helping them compete against Amazon.

Given that Bezos has already pledged in June an additional investment of $3 billion in India, Amazon’s deep pockets will definitely play a pivotal role in defining which way this round goes. From where we stand, it does appear that both are at loggerheads and a knockout of either is unlikely but the last judge’s swing vote is dependent on the time. Interesting times ahead for both these giants. Keep a check on this space for more.


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