How will Walmart's $16 bn acquisition of Flipkart impact Indian etail & retail?
With the Flipkart takeover, Walmart is looking at taking on Amazon and other big players in the Indian market where online is less than 3 per cent of the retail industry but is growing at 45 per cent.
With Walmart taking a controlling stake of 77 per cent in Flipkart for $ 16 billion, this deal is seen by some as a big success for the Bansal brothers ( Sachin Bansal and Binny Bansal), who founded the company in 2007. But some critics are also calling it the death of the big Indian homegrown ecommerce dream.
While both sides have their arguments to offer, there is no doubt that this development will have far reaching implications on the etail and retail ecosystem in India.
Explaining the impact of this deal on the overall retail ecosystem (both online and offline), Vipul Mathur, Brand Head, Skult, said, “In my view this largest takeover has potential to change the growth trajectory of ecommerce and also physical retail. Flipkart has 54 million active consumers, and with this influx of money it can double this base in short period of time. Existing consumer base would keep on enjoying the benefits of cost, convenience etc, and would get accustomed to it, and new consumer base potentially would build up in deeper geographies of India. These new consumers probably would experience fashion through ecommerce before physical retail could have done it.”
However according to Saurabh Uboweja, International Brand Expert and CEO, Brands of Desire, this deal presents a wonderful opportunity for niche e-commerce brands or sector specific brands to create differentiated online experiences.
"There are broadly four large players left in the Indian e-commerce sector who will drive sector dynamics to a large extent. Amazon, Walmart (with Flipkart), PayTM and Reliance (with Jio). All of them are well funded at the moment. It will become increasingly difficult for smaller e -commerce players to sustain and grow on their own unless they focus on very specific niches. It is quite unlikely for any other large player to emerge in the near future yet there is possibility for further consolidation. This is also a wonderful opportunity for niche e-commerce brands or sector specific brands to create differentiated online experiences," he explained.
While Amazon is ahead of Walmart in the online retail market, Walmart on the other hand has the biggest share in offline retail. Now with the Flipkart takeover, Walmart is looking at taking on Amazon and other big players in the Indian market where online is less than 3 per cent of the retail industry but is growing at 45 per cent.
Terming the deal as bitter sweet moment for India’s startup universe, Shereen Bhan, Managing Editor, CNBC-TV18 added, “This is a bitter sweet moment for India’s startup universe. It is also a validation of Flipkart’s business, processes and the team's capabilities. Walmart’s decision to retain the Flipkart leadership team and retain the brand paves the way for an interesting partnership model. Leveraging backend synergies will play out over time, while in the short term both sides will use their money and retail muscle power to hold share and contain Amazon."
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