Amazon has just taken a step further to entrench its position in India by putting forth a formal offer to acquire a 60% stake in Indian e-commerce site Flipkart, CNBC reported Wednesday citing sources. Previously Flipkart was said to be in late-stage talks with Walmart about a deal that is highly likely by the end of June.
CNBC-TV18 says that even with this very recent offer from Amazon, Walmart still leads the deal, as investors in Flipkart, Tiger Global and South Africa’s Naspers, as well as the founders Sachin and Binny Bansal favour Walmart over Amazon.
The Indian economy is slowly taking flight, but before it does, it is essential for companies like Amazon and Walmart to anchor itself in the market. As of now, Indian has a low internet penetration rate, a large income gap and deeply entrenched local retailers which are bound to change as levels of income and internet penetration rates are increasing. Morgan Stanley estimates from the 14% of users leveraging e-commerce to make purchases in 2016 will rise to 50% by 2026.
Currently, Amazon.com holds 27% of India’s $30 billion e-commerce market, while Walmart’s presence in India is its operations of 20 superstores under its Best Price banner.