Flipkart has been the world’s third most funded private company. Interestingly it has also been one of India’s biggest loss making brands too.
Why did Walmart buy it ?
At $16 billion this is the world’s largest e-commerce deal . Before this the world’s biggest deal was when the US retailer PetSmart acquired the online store Chewy for $3.35 billion.
Flipkart the poster-boy of the Indian start-up scene is one of the most admired company that has inspired innumerable entrepreneurs in India. The deal with Walmart just goes on to show how valued our homegrown startups are today, and gives a boost to the Indian ecosystem. Not just that, it also speaks volumes about the potential of the Indian market.
Walmart gave its all to boot out rival Amazon and clinch the deal. This deal is being considered as Walmart CEO Doug McMillon’s boldest move and it seems to be a wise decision considering that online sales in India are growing at a rate of 35% p.a. According to an estimate by Morgan Stanley , India’s e-commerce market is expected to grow to about $200 billion in ten years, making it the market where every brand would want to be.
As the heading of this article says -its now Walmart vs Amazon. Another Indian brand has been bought over and left us without our own homegrown company to admire. China has Alibaba to admire, what about India ? Decades back Thums-Up was bought over by Coca Cola when it entered India leaving India with no cola brand to call its own till date.
Walmart is a killer of small brands. With a size of $500 billion it has the potential to wipe out all the small businesses. It has the ability to sell things so cheap that small retailers would find it near impossible to match up to. Walmart has the capability of cannibalising the whole market.
The ‘groceries’ segment is going to be at the centre of the price war. Walmart is an expert at delivering groceries at the most affordable prices and has the potential to literally wipe out numerous small neighbourhood operations.
If there is one market everybody wants to enter its India. Amazon lost the Chinese market to Alibaba . China did not work out for Walmart either. Its India that they both have their eyes on. The size of the retail sector is India is estimated to be about $800 billion !
For decades Walmart has been trying to enter India. They tried opening wholesale stores with Bharti but that was not a very successful venture.
While Amazon has made great headways into the Indian market it still remains at number 2 with Flipkart ruling the charts.
Flipkart has been the world’s third most funded private company. Interestingly it has also been one of India’s biggest loss making brands too. In the fiscal year 2016-17 it made a loss of Rs 8,771 crore.
So why did Walmart invest so much ?
The answer is Amazon.
If there is one company everybody is scared of its Amazon.
Amazon has the reputation of killing its competitors like no other. When it comes to online retail then the only competitor that Amazon has is Walmart. And this was the only way that Walmart could get an entry into one of the world’s most lucrative market – India. If on a global level Walmart has to keep Amazon under control then the Indian market is most important for it. Hence the Flipkart deal was very important to Walmart.
So what India is going to witness is the war of the giants.
The online space will see a lot of interesting developments as the two biggies fight it out. They are both looking at market share and not profits. This translates into both of them churning out lucrative deals , low shipping costs and better service as they work hard to win over the Indian consumers.
So its going to be a good time for India.
Achche din aane wale hain – at least in the e-commerce space.
Well lets wait and watch!