Walmart, the largest retailer in the United States, has acquired Flipkart to compete with Amazon in India without being able to compete directly with it.
As Amazon continues to excel in online apparel sales, Flipkart has invested Rs 1,500 crore in Aditya Birla Fashion and Retail Ltd to acquire a 7.8 per cent stake in the company to reduce Amazon’s dominance in the segment.
With Aditya Birla Fashion and Retail Ltd holding the Indian sales of leading brands such as Ellen Sally and Van Hussein in its hands, Flipkart has made this investment to reduce its dominance in the online clothing business and gain more trades.
While Amazon is already reeling from the Geomart uprising, Flipkart’s subsequent decisions are creating further crisis for Amazon.
While other trades in the Aditya Birla Group are excellent, they have not been able to achieve large-scale success and business in the retail and consumer business. Amidst the financial crisis, the Aditya Birla Group is set to invest the proceeds from Flipkart’s Rs 1,500 crore deal to reduce its debt and expand its new business.
The deal will enable Aditya Birla Fashions to sell corporate clothing with Mintra, Flipkart’s exclusive clothing retailer, with delivery all over India.
The fact is that Flipkart and Aditya Birla Group have made huge business profits.
While Amazon holds a significant market share in online fashion sales, Flipkart’s deal is said to have shaken the Amazon fashion sales base.
While Geomart is already doing well in online clothing sales, it looks like Flipkart’s merger will have a huge impact on Amazon.
Just as Flipkart acquired a 7.8% stake in Aditya Birla Fashions a few months ago, it acquired a significant stake in Flying Machine brand under Arvind Youth Brands with an investment of Rs 260 crore in order to gain more trade and customers in the apparel segment.
Leading online retailers such as Amazon and Flipkart have increasingly invested in brick-and-mortar retail stores since Geomart entered the online market.