A HUMONGOUS DEAL-WALMART BUYS FLIPKART-IMPACT ON INDIAN E-COMMERCE
It is wrapped! Walmart has acquired a huge 77% share in the Indian e-commerce giant which is worth 16 billion $, The 20 billion $ giant Flipkart is India‘s biggest E-commerce company, in a rough competition with the e-commerce giant Amazon was on the brink of bankruptcy, both the companies was burning huge cash but Amazon is the shark of e-commerce market, Flipkart had to go to Walmart for survival. After Walmart bought the controlling stake, Flipkart is valued at more than $20bn. The deal also saves Flipkart, which was running out of cash in its battle with Amazon. Both competitors have been "burning cash" in massive sales and discounts pegged to Indian festivals in a bid to acquire more customers.
Positive factors of the Hulk deal-
- Walmart trusted the potential of Indian E-commerce sector. This deal will raise confidence on Indian E-commerce market and thereby will attract more investors.
- At present Amazon is the largest E-commerce platform in retail sector of India. Though Flipkart is giving a good competition to Amazon, it’s struggling with several bottlenecks such as drying up of investment, lack of infrastructure etc. Walmart – Flipkart deal will be a boost to Flipkart and it will give a tough competition to Amazon.
- This deal will end the monopoly of Amazon in the Indian E-commerce Industry, and will give a tough competition to the e-commerce giant.
- More competition leads to more benefits to customers in the struggle of attracting customer base.
- More investments will results in attracting best talent to E-commerce sector.
- Till recently, business model of Indian E-commerce companies are not sustainable. Walmart is very efficient in managing supply chains. Since 1980s Walmart is buying products directly from manufacturers. If the efficiency of supply chain is replicated in India, Indian E-commerce companies will turn into profitable.
Negative factors-
- India still does not have national E-commerce policy. Indian government is planning to bring one by the end of 2018. As we are in the nascent of policy regulations for E-commerce, this sector in India is susceptible to exploitation by foreign players.
- Both Walmart and Amazon are US companies. This means no Indian E-commerce company is in the first two places. Britishers also came to India in 16th century in the name of doing business with India, but eventually they ruled India. Taking lessons from that, we need to be careful. No country can colonize India in the present times, because democracy and sovereignty have worldwide support. But we need to be careful to avoid Digital colonialism.
- Big data of Indian customers such as buying history, personal details, search history etc can go into the hands of US Company. This can be misused by vested interests. We already witnessed Facebook – Cambridge Analytica incident recently.
- This deal is against to the spirit of ‘Make in India’ program.
- Walmart has its branches in several countries. It buys products mainly from China. If it does the same in India, it will be a loss to Indian manufacturers and thereby to Indian economy.
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Source - Edumyra
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