The homegrown e-commerce major Flipkart's board has given it a nod to engage with rival Amazon for a possible stake sale, sources close to the matter have said.
The development talks are in line with the world's largest retailer Walmart being is in an advanced stage of discussions with Flipkart to buy a majority stake in the Indian online retailer, valuing it at $18-20 billion.
Earlier Walmart had put a rich offer before Flipkart for gaining majority shareholding in the company through a mix of primary and secondary sale of shares. The transaction will see most of Flipkart's early investors like Tiger Global sell their shares in the company to Walmart. It was also reported that SoftBank may part-sell its stake despite it having invested in the web retailer less than a year ago. In all, Walmart is expected to pump $8-10 billion into the Flipkart deal.
Industry experts said Walmart is a better fit for Flipkart as it has long-term plans for the Indian market across online and offline retail. The US-based retailer has been making investments to grow its online presence and counter Amazon's growing dominance in its home market with acquisitions like Jet.com for about $3 billion in 2016.
Amazon - which has been aggressively battling the domestic e-tailer, with billions of dollars lined up for investment in India - may look to get Flipkart into its fold to broaden its size of the business here. It has launched multiple products like Amazon Prime, Video and Music, and is consistently pushing incentives to get more shoppers onto its platform.
Last year, Flipkart raised $4 billion when SoftBank, along with other marquee investors like Tencent, pumped in the capital. The investment gave the homegrown e-tailer fresh ammunition to take on Amazon. Amazon has invested over $3 billion in India and may not be ready to dish out the kind of valuation that Walmart is ready to offer to Flipkart, industry insiders said. For Amazon, India is the most important market outside of the US after it failed to gain a foothold in China.