India’s e-commerce space was thought to be largely settled, with only Amazon and Walmart-owned Flipkart now in the fray, but a massive new contender has thrown its hat into the ring.
Google has invested $350 million into Flipkart. Google’s investment is a part of a $1 billion funding round that Flipkart has just announced. Flipkart’s largest shareholder Walmart has also participated in this round, putting in $600 million of its own money into the company. The round keeps Flipkart’s valuation relatively steady at $35-36 billion.
“As part of the latest funding round led by Walmart, Flipkart today announced that it will be adding Google as a minority investor, subject to receipt of regulatory and other customary approvals by both parties,” a media statement said. Google’s proposed investment and its Cloud collaboration will help Flipkart expand its business and advance the modernization of its digital infrastructure to serve customers across the country.
This is an interesting gambit by Google, which has previously tried its hands at e-commerce in India. All the way back in 2017, Google had launched an app named Areo in India which provided food delivery and home services. The app had been piloted in Bangalore and Mumbai, and hadn’t seen much traction before it was discontinued.
Google has now decided to back Flipkart, which is one half of the e-commerce duopoly that currently exists in India. It makes sense for Google to back Flipkart over Amazon — while Google doesn’t particularly compete with physical retailer Walmart, its Google Cloud service competes directly with Amazon’s AWS. As such, Google seems to have made a play in India’s e-commerce space by choosing to back Walmart over Amazon.
Google’s investment also appears to demonstrate the company’s belief in India’s e-commerce space. Some of Google’s India investments haven’t quite worked out — Dunzo, for instance, is on the brink. But even as India’s e-commerce space isn’t growing as fast as it once was, and valuations of both Amazon and Flipkart haven’t changed much since Covid, Google has come in a put in a sizable cheque into Flipkart. It remains to be seen if being backed by Google helps Flipkart as it battles with Amazon for supremacy, but India’s e-commerce space is now also a proxy for the rivalry that that plays out between Amazon and Google in the US.