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Wal-Mart Considering $1 Billion Investment In India's Flipkart

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Wal-Mart Considering $1 Billion Investment In India's Flipkart

Wal-Mart Stores, Inc. (NYSE: WMT) has identified India as a lucrative market, but there is one foe standing in its way: Amazon.com, Inc. (NASDAQ: AMZN).

To beat Amazon in the Indian market, Wal-Mart is eyeing a $1 billion investment in the country's largest online retailer, Flipkart Online Services, according to a Bloomberg report.

Related Link: 4 Pieces Of Advice For Wal-Mart Now That Jet.com Acquisition Officially Closed

Flipkart was founded in 2007 and sells products across multiple categories, including appliances, home and furniture, electronics and apparel.

Bloomberg noted that Flipkart's most recent valuation was around $16 billion.

Details Of The Deal

By partnering with Wal-Mart, Flipkart would gain capital and a partner to fend off Amazon's ambitious expansion plans in the country. Amazon's CEO Jeff Bezos said in June he plans on spending $3 billion in India to win over customers from online peers, including Flipkart.

If the deal goes through, the competitive intensity between Flipkart and Amazon will shoot up," Gautam Chhaochharia, head of India research at UBS told Bloomberg.

Wal-Mart would also benefit from a partnership since it would give the company an opportunity to compete with Amazon, which doesn't dominate the Indian market anywhere close to the scale in which it does in the United States.

"With its main competitor Amazon getting very aggressive, Flipkart needs a solid partner to bolster its operations with not just capital but also branding, logistics, sourcing and other retail experience, they won't be able to pull it off with small partners," Devangshu Dutta, CEO of the Gurgaon-based retail consultancy Third Eyesight told Bloomberg.

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