Dive Brief:

• Walmart has prevailed in what has reportedly been a pitched battle with Amazon to acquire Indian e-commerce company Flipkart. The board of Flipkart Online Services Pvt has reportedly approved an agreement to sell 75% of the company to a Walmart-led group for $15 billion, people familiar with the matter told Bloomberg. 

• The proposal entails Japanese multinational conglomerate SoftBank (said to have favored Amazon’s offer) selling its more than 20% Flipkart interest at a valuation of some $20 billion, and Alphabet is expected to join in Walmart's bid, one of the sources told Bloomberg.

• Board members ultimately favored Walmart's offer in part because the company believes regulators will more likely approve it than a takeover by Amazon, which is the No. 2 e-commerce operator in India behind Flipkart, Bloomberg reports. Walmart declined to comment to Retail Dive Friday and Flipkart didn’t immediately return Retail Dive’s request.

Dive Insight:

Amazon has been steadily growing its India operations since its debut there in 2013, and it's about to get a run for its money there.

It's been pretty smooth sailing for Amazon so far, despite Flipkart's appeal as a home-based enterprise. Amazon has stayed true to a strategy that has worked in other markets, most prominently launching its wildly successful Prime program in India in 2016. The U.S. e-commerce giant has rapidly amassed mobile commerce market share, accounting for 30.3% of India’s mobile commerce users in the first quarter or so last year, compared to 30.7% for market leader Flipkart, according to data from research firm 7Park Data. Amazon's mobile app engagement rate among Indian customers rose 46% year over year, while Flipkart’s app engagement rate was down 11.5% in the same period. 

Amazon has taken other tacks, too, working to grow its private-label offerings and last year grabbing a 5% stake in Indian retail company Shoppers Stop. Flipkart would have furnished Amazon with distribution infrastructure, sellers and geographic areas that Amazon doesn't already have.

Instead, it will be grappling with Walmart, which in one fell swoop garners a significant e-commerce business that would have been daunting to nurture from the ground up. "It would provide significant benefit for Walmart because it certainly gives them" access to India’s burgeoning market, Mihir Kittur, co-founder of e-commerce analytics company Ugam, told Retail Dive in an interview.

Although Flipkart is widely known to be supported by foreign investment, it is nevertheless very much perceived as an Indian company. "There's a nationalistic part to that — Flipkart has always presented itself to be the homegrown e-commerce play," Kittur said, adding that Walmart is likely to keep the Flipkart moniker. "Reinvesting in branding is a huge exercise and Flipkart already has a good brand in India."

That could help ease concerns by Indian regulators. New guidelines from the Indian government last year are designed to push up Indian e-commerce businesses, encouraging foreign investment but not foreign ownership and operation. 

Even before those new rules, India posed an undeniably intriguing opportunity for e-commerce players. A study from the Internet and Mobile Association of India found there were 52 million new internet users there in the first six months of 2015, bringing the country's total user base to 352 million as of mid-2016. And of those, 213 million — more than 60% — accessed the web through their mobile devices.

India is the top developing country for retail investment, on the strength of a growing economy and middle class, and a favorable regulatory environment, according to A.T. Kearney's Global Retail Development Index last year —  outpacing even China.

Competition just got fiercer, considering that Walmart has deeper pockets that are likely to sweep away Flipkart's ongoing struggles for profitability. Morgan Stanley analysts have said Flipkart could reach $119 billion in sales by 2020. In 2016, however, they took a chunk out of Flipkart's valuation, reducing its assessment of the e-commerce venture by 27%, bringing it down to $11 billion from the $15 billion valuation it enjoyed at the time of the June 2015 funding round. (The financial services firm owns a small stake in Flipkart.)