Flipkart raises $1.2B in Walmart-led funding round

Yahoo Finance’s On The Move discusses Flipkart, as it raised $1.2 billion in a Walmart-led funding round.

Video transcript

JULIE HYMAN: You're watching "On The Move" on Yahoo Finance. I'm Julie Hyman alongside Adam Shapiro. Just looking at Walmart shares here. They're up 1.3% today. It seems though lately there has been a flurry of investment in India. And Walmart is joining in a funding round for Flipkart of India, big e-commerce company there. $1.2 billion is what Walmart's contributing.

Melody, you've been watching that. So people call this what, the sort of Amazon of India, right?

MELODY HAHM: Yeah, I mean, Walmart would love for it to be the Walmart of India, right? But if you think about the original investment, they actually put in about $16 billion back in 2018 for a 77% stake in Flipkart. So by all measures, they were already sort of owning the company.

If you actually go to Flipkart's website right now, it very much resembles Walmart. It's the blue and yellow sort of color scheme. The branding is very much akin to what we see here in the US.

As you mentioned though Julie, this is in the same couple of weeks as Amazon announcing that they will be investing more than a billion dollars into the nation, Alphabet announcing that they want to be pouring in $10 billion over the next couple of years into India to really build the infrastructure there. And of course this is coming amid the coronavirus crisis, right? After the US and Brazil, India has been the hardest hit.

So as much as that initial investment in Flipkart was to make sure that that foot traffic, which India is still heavily relies on would be robust, Walmart executives over the last couple of weeks have said that there have been significant sales declines in Flipkart. And so they're really hoping this additional investment will be able to bolster the e-commerce platform side of things.

Julie, I think we've talked about it previously on this programming. But this is not a short-term play, right? India has a lot of catching up to do in terms of the e-commerce side of things. We know Amazon prime has a subsidized model there, even entering the streaming market. And they've been performing quite well there with a much cheaper sort of offering than here in the US.

So of course, as a lot of these tech giants expand their sites, try to figure out ways to reach these new audiences, India is like the next natural bet when it comes to the new consumer base.

DAN ROBERTS: Of course, Melody, Walmart acquisitions in the tech and e-commerce space have not gone so swimmingly in the last few years. Maybe worth an update for our viewers. You know, they had to sunset Jet.com, which they bought for $3 billion in 2016. I don't know if it's fair to say yet that that was a failure. I'm sure they had some learnings from it. Then separately, not to be confused with Jet.com, there was Jet Black, which you know they brought on Jenny Fleiss from the Rent the Runway team to start. Not sure how that's gone because she has left.

And then of course the Bonobos acquisition, which, what I hear from Bonobos, still hasn't been profitable for Walmart. Although I'm a fan of Bonobos. And then Andy Dunn, the founder of Bonobos leaving Walmart's e-commerce division. So boy, oh, boy, tough track record as Walmart tries to pursue Amazon.

MELODY HAHM: And Dan, precisely, even outside of looking at Amazon as the real competitor here, for folks in India, the real competitor is Reliance Retail, which is basically the Amazon of India, run by a billionaire who basically operates everything from textiles to e-commerce to insurance and everything between. It kind of is like a Berkshire Hathaway of sorts in India. And they have aggressively been in the marketplace platform. So to your point, this is not a surefire bet, right? Just because you have a billion people who could be potential consumers, that is by no means a surefire win for Walmart here.