The two of the world’s largest retailers are planning to gain a commanding position by building scale through deep discounting in the Indian retail market, which is expected to cross $1 Tn by 2020.
While both companies dominate the US market, they are still trying to establish turf in India and to compete with home-grown ecommerce biggies like Flipkart and Snapdeal, who have raised funds from overseas investors as they seek to strengthen their positions.
While Amazon India focuses on bringing buyers and sellers to one online platform, Walmart stores are catering to small retailers through wholesale trade.
Amazon has invested approx. $250 Mn (INR 1,696 Cr) through a rights issue into Amazon Seller Services. This is the biggest capital infusion in the company since its entry into the Indian market three years ago as per the filings with Registrar of Companies. This takes Amazon’s total investment to about $710 Mn (INR 4,800 Cr) in Amazon Seller Services in the past year.
On the other hand, Walmart Stores is all set to infuse $53 Mn (INR 360 Cr), it said in an RoC filing on Wednesday. The company plans to open over 50 new stores in India. This comes at a time when it plans to close nearly 270 stores globally.
Rajneesh Kumar, vice-president of Walmart India told ET, “The latest equity infusion is to fund working capital and capex requirements of our growing business in India. As a wholesale cash and-carry business, we work with and develop local suppliers and create local beneficiaries along the supply chain.”
India’s e-commerce market is expected to grow to $103 Bn by 2020, as per a report by Goldman Sachs. And home-grown ecommerce biggies are all set to take advantage.
Geared up with structural change in management, Flipkart is expected to raise over $1.4 Bn in the next round of funding. Snapdeal, on the other hand, has strengthened its senior management team and has unveiled Snapdeal Ads to increase revenue through targeted advertising tools.
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