Following local FDI regulations and restrictions, Walmart will using the marketplace model were local merchants will sell goods and services using Walmart’s platform. Walmart has already appointed a team of over a dozen employees to begin setting up the marketplace.
This is not Walmart’s initial interest in India, and over the last few months was in negations to acquire local marketplace SnapDeal. The plans fell through, and eBay invested $134 million into the firm. Another attempt to partner with local telecommunications company Bharti Enterprises did not come to fruition as well.
As Walmart did not link itself to a local entity, the US retailer is establishing its own Indian firm. The FDI restrictions on foreign companies will not allow Walmart to pursue its US business model; hence Walmart will be offering an online marketplace, providing services to local sellers.
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Amazon has been in talks with Indian officials to ease on FDI restrictions. The local government also released a discussion paper on the matter and is currently debating whether to allow direct investments from foreign firms or not.
India’s Ecommerce market, despite regulations and restrictions, is one of the fastest growing markets in the world. It is expected Ecommerce in India will grow sevenfold to $22 billion over next five years.
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