Amazon and Flipkart
Amazon and Flipkart

US retail giant Walmart has reportedly invested Rs 2,190 crore in Indian e-commerce major Flipkart amid a pitched battle with archrival Amazon. This is Walmart's first infusion of funds in the form of equity in the Indian company after the record $16 billion takeover.

Flipkart has been in the news recently with the exit of a number of executives from senior management including co-founder and chief executive officer Binny Bansal caught in a me-too scandal. Sachin Bansal, the other co-founder, quit Flipkart soon after Walmart takeover.

The fund infusion is an indication of Walmart's determination to strengthen Flipkart's fight against arch-rival Amazon.

"This is just the first of many such tranches that Walmart will infuse into Flipkart to run operations more efficiently as much of the $16 billion that it paid up for acquiring majority stake in Flipkart would have gone into buying up stakes of other stakeholders," The Hindu Businessline quoted K Vaitheeswaran, a founder of the company, as saying.

The funds will likely go to technology upgradation and integration of Flipkart and Walmart systems across merchandising, logistics, and management. Walmart is also targeting hyper-localisation by integrating Flipkart systems with systems of locals stores.

Flipkart is undergoing a makeover with chief executive officer Kalyan Krishnamurthy at the helm. Walmart has begun the process by laying off 60 per cent of the 450 employees of Jabong, an online fashion retailer that Flipkart subsidiary Myntra acquired earlier this year. Flipkart sources have said Jabong will share management resources with Myntra, which will continue to exist as a Flipkart subsidiary in fashion space.

A regulatory filing of Flipkart said it had allotted some 7,45,118 equity shares of a nominal value of Rs1 per share to Flipkart Private Ltd, Singapore (formerly Flipkart Ltd), at a premium of Rs 29,399 per share.

India's e-retail domain has been in a churn with Walmart takeover of Flipkart, whose main rival in India, Amazon, is also Walmart's main rival in the US market. Flipkart is the e-tailing market leader in India with an estimated gross market valuation of $7.5 billion with Amazon close on the heels at $5 billion.

India's online retail segment is worth $32.7 billion by the end of this year, according to estimates. This means e-commerce would account for just 2.9 per cent of India's retail market with plenty of room for growth.