Walmart prepares to spend more than $2.5 billion in India as the retailer doubles down on the opportunities it sees in India’s e-commerce and payments markets, even as the company struggles with rising costs amid market downturns .
Walmart paid some $780 million to India’s tax authorities earlier this month after PhonePe, in which the retailer has a majority stake, moved its domicile from Singapore to India. Walmart also plans to invest between $200 million and $300 million in PhonePe’s ongoing funding round, according to a source familiar with the matter. (PhonePe declined to comment.)
The company, which owns a majority stake in Flipkart, is now looking to spend about $1.5 billion to buy back the shares of the e-commerce company from early backers Tiger Global and Accel Partners, Indian newspaper Economic Times reported. reported Thursday.
India, the second largest internet market in the world, has become a major battlefield for Walmart and Amazon.
Amazon has spent more than $9 billion in India over the past decade (including investments for AWS cloud regions in the country). Walmart, which missed the e-commerce race in the US, has coughed up more than $20 billion on Flipkart and PhonePe to buy the lion’s share of the Indian e-commerce and payments markets.
According to Bernstein, Flipkart leads the e-commerce market in India. And PhonePe controls more than 40% of all transactions on UPI, a payment network in India built by a coalition of retail banks. Processing more than 7 billion transactions per month, UPI is the most popular way Indians pay online.
While Walmart is making splash moves, its rival is taking a different approach. Amazon has spent the past few months streamlining its operations in India. It’s made some of the newer bets: food delivery, wholesale, and an attempt at online learning. But by all accounts, the company appears to be continuing to invest in its core e-commerce business in India.
Amazon faced a very public setback in the country last year after India’s largest retail giant Reliance outsmarted the US company to secure the assets of retailer Future Group. Amazon went public with its frustration and then went into silent mode.
In one of India’s first major announcements in two years, Amazon launched Amazon Air in the country earlier this week. But the company’s top executives were absent from the event, according to a person familiar with the matter.