Still, Walmart missed out on China’s e-commerce boom, and it does not want to make the same mistake with India — especially with its rival Amazon already a strong player there. Only about 2 percent of India’s retail sales are online now, but tens of millions of Indians are getting onto the internet every year via cheap smartphones and rock-bottom mobile data prices.
Amazon has committed at least $5.5 billion so far to building its India presence, fighting to gain market share among the country’s young, increasingly tech-savvy shoppers. After starting an Indian site, Amazon.in, from scratch in 2013, Amazon blew past local players like Snapdeal and is now a close No. 2 to Flipkart in sales.
Based in Bangalore, Flipkart was founded in 2007 by Sachin Bansal and Binny Bansal. The two men, who are not related, worked briefly at Amazon’s back-office operations in India before deciding to form their own company.
Like Amazon, Flipkart initially started selling books online before expanding into a vast array of products. On its way to becoming India’s top online retailer, it successfully navigated problems such as customers’ preference for paying in cash and the country’s spotty roads and delivery networks.
While Walmart operates stores around the globe, India would be a relatively new frontier for the huge retailer. The company operates wholesale stores in India, but it has no public-facing retail or e-commerce presence.
Flipkart would be one of Walmart’s largest acquisitions since it acquired Asda, a large British grocery chain, in 1999. That deal would be valued at about $16 billion today, adjusted for inflation.
Analysts point out that Walmart has made very few large acquisitions in its 56-year history and that some of those deals remain works in progress.
Walmart made a big splash in 2016 when it purchased the e-commerce site Jet.com for $3.3 billion. Jet, based in Hoboken, N.J., was supposed to be Walmart’s answer to Amazon’s appeal with higher-income, urban-dwelling millennials in the United States.
But there are signs that Walmart is still trying to fully integrate Jet into its larger e-commerce strategy. After reporting that its e-commerce sales growth had slowed in the fourth quarter, Walmart said it would focus on driving new customers through its main Walmart.com site, not through the Jet platform.
Acquiring Flipkart would give Walmart an instant leg up on Amazon in India, but it is still likely to face stiff competition from its primary rival. Amazon’s chief executive, Jeff Bezos, views India as his chance to make up for the company’s failure to establish a major presence in China, just like Walmart. That likely means the online giant will double down on its investment there now that Walmart has come onto the scene.
“I don’t think they should do it,” Scott Mushkin, a retail analyst at Wolfe Research, said of Walmart’s potential deal for Flipkart. “Amazon is like an A.T.M. machine. I wouldn’t want to be competing with Amazon in India.”
In addition to pouring billions into its Indian e-commerce site, Amazon is also investing in original content from Bollywood movie studios and has developed local versions of crucial products, such as its Prime video streaming and Echo voice-activated speakers.
Amazon’s assault was so intense that a couple of years ago, some analysts were predicting that Flipkart would be crushed. Complicating matters, Flipkart was racked by management turmoil.
But Tiger Global, one of Flipkart’s earliest and largest investors, pushed for the appointment of one of its own executives, Kalyan Krishnamurthy, as chief executive in January 2017. Mr. Krishnamurthy is credited with steadying the company and improving the customer experience.
SoftBank, a Japanese investment firm that has been making large bets in India over the last few years, also agreed to provide $2.5 billion in fresh capital last summer.
Walmart would bring an even larger potential source of funding to Flipkart as it tries to keep growing.
“For the ecosystem, this is good,” said Satish Meena, a senior analyst in New Delhi for Forrester, a technology research firm. “There is more money and more expertise coming into the system. And customers will get more products at a lower price.”
The e-commerce market in India, which includes categories like travel, was about $38.5 billion last year, and it is expected to grow to $50 billion in 2018, according to a recent study by Deloitte and the Associated Chambers of Commerce and Industry of India.
“The whole game now is scale,” said Bill Dreher, a retail analyst at Susquehanna International Group.