Why Is Google’s Alphabet Reconsidering Flipkart Minority Stake Purchase?

Reportedly, India has maintained its position as the third largest online retail market in the world after China and the USA. Pocketing in benefits, the acquisition of Flipkart by the American supermarket chain, Walmart is considered to be a major attempt of stretching its wings into the Indian online retail business. With a mammoth valuation of $500 billion, Walmart purchased major stakes in Flipkart, recently.

Another major twist in the tale is that Alphabet Inc. (NASDAQ: GOOGL), the parent company of Google, is also been going for the jugular to buy a minority stake in this deal. However, according to recent reports making rounds, it’s noted that Alphabet is still considering the pros and cons of purchasing into the most-valued online marketplace in the country. The parent company that owns the tech-giant Google, is still at sixes-and-sevens about acquiring a minority stake in Flipkart. The fact still remains that Tiger Global and Walmart Inc. have kept the “convincing” ball rolling, making earnest efforts to bring the search engine giant into play.

The Minority Investment Innuendo

According to reports, both Tiger Global and Walmart have had at least five rounds of discussions with Alphabet to persuade it to make an investment, which would go by the book of $1 billion to $2 billion. Walmart and Tiger Global are making efforts to bring Google to reason with the fact that the purchase of such stake will facilitate its access to a 175 million registered users array and the relevant customer database. In addition to that, they are studying user buying pattern so that they can minister a more targeted search experience for its users.

Earlier, there were whispering hints in media that Walmart has already convinced Alphabet Inc., to put up a minority stake in India’s homegrown e-retailing behemoth. Adding a new and unexpected twist to the fresh-off-the-press Flipkart-Walmart chronicles, search engine giant Google was reportedly ready to offer $1-2 billion for the minority stake. As a matter of fact, Walmart and Google are already integrated into a business partnership wherein Walmart’s products are exclusively sold on Google Express. Furthermore, Google Express also facilitates personalized voice shopping for Walmart products online. There is every possibility that this existing partnership may result in Google to single out Walmart and hop aboard for the deal.

As per the deal, Walmart is hammering away to stack up 85% to 86% stake in Flipkart while a large part of the remaining stake will be taken over by Google. Following the deal, several of Flipkart’s existing investors like SoftBank, Tiger Global Management, and other will dilute their stake and afterwards, mark their exit.

How Will Flipkart Benefit From Google’s Investment?

Apart from bolstering funds and imparting expertise skills, Google’s investment will offer new dynamism to Flipkart. With Amazon in a neck-to-neck competition with India’s largest retailing sector, this might be a fair chance wherein it can intimidate and overpower the Seattle-based e-commerce giant. According to sources, Google is evaluating the safety valve from the acquisition of this minority stake, but is likely to cushion Flipkart with right kind of technological force.

Google In The Walmart-Flipkart Fiasco

Google is showing concerns as the Flipkart-Walmart deal has not yet been completed since Soft Bank Group is still considering its exit from the firm. On May 13, Walmart announced that it would buy 77% of online retailer Flipkart for $16 billion, as it made a leviathan entry into India’s e-commerce market.

As per reports, Walmart has approached fair trade regulator Competition Commission of India (CCI) for approval of its proposed acquisition of a majority stake in e-commerce major Flipkart.

Certain independent studies validate the fact that Flipkart is still one largest e-commerce player in the country. Considered to be one of the most trusted brands, both in metros and tier-III cities alike, Google can inherit a deeper insight into the buying trends of customers. This could be a revolutionary breakthrough for the search-engine whilst launching a payments platform.

The experts get down to brass tacks by saying that Flipkart would help Google be on same the same wavelength with the data from the first click to the final delivery. This kind of knowledge is invaluable, something even Amazon does not have.