Sample Reading Comprehension - 4 | HPSC Preparation: All subjects - HPSC (Haryana) PDF Download

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Business news may not replicate itself, but it often exhibits similar patterns. In 2007, Walmart, the largest grocer in the United States, proudly declared its intention to conquer the coveted Indian market, aiming to become the first global retailer to establish a presence there, outpacing its envious competitors in the process. Fast forward to May 9th, and the echoes of the past resurface as Walmart announces a similar endeavor—this time by acquiring a majority stake in Flipkart, India’s leading e-commerce platform, for $16 billion. Interestingly, Amazon, its formidable online rival, had also set its sights on Flipkart. The sense of déjà vu arises from Walmart's prior attempt, which proved disappointing. Despite aspirations to navigate regulations safeguarding local shopkeepers, barriers persisted, resulting in a mere 21 wholesale stores in India contributing a meager 0.1% to Walmart's $500 billion global revenues, along with a small loss. Nevertheless, this setback did not deter the retail giant from pursuing the largest foreign acquisition in Indian history.
The Indian e-commerce market significantly differs from America’s brick-and-mortar retail landscape, much like the distinction between Walmart's Arkansas roots and the bustling city of Bangalore. While Walmart may have an excess of stores in its mature home market, Flipkart operates in the online realm, addressing a market where only 5-10% of Indians have engaged in online shopping. This deal deviates from Walmart's previous strategic moves in its pursuit of growing its e-commerce presence. Unlike previous acquisitions such as Jet.com and Bonobos, Flipkart, founded in 2007 by former Amazon employees, commands a higher valuation.
Walmart is poised to own approximately 77% of Flipkart, valued at over $20 billion. This substantial investment raises eyebrows in the Indian tech community, particularly considering that Flipkart's valuation was under $12 billion just a year ago. SoftBank, a major shareholder with a $2.5 billion investment nine months prior, stands to profit with a $4 billion return. Despite this significant investment, analysts predict that Flipkart, currently operating at a loss per shipment, may not yield quick returns, especially with intensified competition from Amazon and other ambitious players like Paytm Mall, supported by Alibaba.