Since its acquisition of in 2016, Walmart (WMT 0.09%) has shown that it doesn't intend to remain idle while the trend toward e-commerce passes it by. The world's largest retailer has made an increasing number of moves designed to break the stranglehold enjoyed by (AMZN 0.23%).

The acquisition of numerous multichannel retailers, its forays into shipping and customer pickup, and its willingness to experiment with initiatives designed to target millennial shoppers are examples of steps Walmart has taken to compete in the ongoing shift to e-commerce. While the company was initially viewed as an also-ran, many now believe that Walmart could provide significant competition for Amazon as more and more sales move online.

Now it appears India has become their latest battleground.

Indian family gathered around laptop making an online purchase.

India represents a great opportunity for e-commerce growth. Image source: Getty Images.

A big prize

Amazon and Walmart are in a heated battle to acquire India's biggest online retailer, Flipkart. While reports about the potential for such a deal have been around for several years, the rumor mill switched into high gear recently, with numerous business publications indicating that negotiations between Flipkart and the two would-be acquirers are ongoing.

Walmart and Amazon are both bidding for a controlling interest in the company, according to reports by Bloomberg. Walmart is said to be initially seeking a minority stake that could increase to as much as 50% to 60% over time, depending on which existing investors would be willing to sell. Flipkart's largest shareholder is Japanese telecom and internet giant SoftBank, which invested $2.5 billion in the company last year. Other investors include investment firm Tiger Global Management, Chinese internet conglomerate TencenteBay, and Microsoft.

Walmart is said to be ahead in the discussions, as the company would face less regulatory scrutiny than Amazon, Flipkart's biggest rival in India's e-commerce market. If Amazon were to acquire its Indian competitor, it would control an estimated 80% of the country's online sales. If Walmart were to gain control of the company, it would mark its biggest investment yet in e-commerce.

A vast population of young consumers

It's easy to see why both companies are keen to make bold entries into this emerging online powerhouse. India is home to more than 1.3 billion people, and more than two-thirds of them are younger than 35. Online sales in India are expected to grow at a compound annual rate of 30% between now and 2026, topping $200 billion, up from just $15 billion in 2016. At that rate, e-commerce could account for 12% of the country's retail sales, up from only 2% today. 

Flipkart is billed as India's top online retailer, though some believe that Amazon may have taken the lead. The company was founded in 2007 by two former Amazon employees, and modeled after their former employer. The site was initially envisioned as an online bookseller, and has evolved into the most valuable start-up in India, currently valued between $17 billion and $19 billion.  

Woman smiling while packing orders at Amazon fulfillment center.

Amazon wants to control e-commerce in India. Image source: Amazon.

Growth through acquisition

This isn't the first time either Amazon or Walmart has sought to expand its domain via a major acquisition.

Early last year, Amazon made its first major move into the Middle East, acquiring e-commerce platform in a deal estimated at $650 million. Walmart, for its part, paid $3.3 billion for, along with a host of other smaller retailers to boost its omnichannel capability.

Over the last several years, Walmart has emerged as one of few companies with the scale to take on Amazon head to head. Gaining a foothold in a market that represents the world's second-largest population would be an important win for either company. Stay tuned.