Walmart’s recent acquisition of Flipkart was a historic event, one that sent ripples across India’s ecommerce industry. The acquisition could not have come at a better time for Flipkart. It is common knowledge that despite being a category leader in India, Flipkart was making losses.
Walmart has come in at an opportune moment, and will likely bring in a sense of smart frugality with it. The way I see it, Flipkart now has a very unique opportunity to push growth. Flipkart and Amazon have owned the largest chunks of our market for a long time now, and there has been healthy competition between these titans.
However, Amazon has access to a large pool of international funding. Now, thanks to Walmart, Flipkart too has deeper pockets.
The arrival of Walmart spells a fresh dawn for Indian startups and ecommerce at large. It promises to transform how Indians shop, and the competition will lead to technological innovations across the board.
One thing that struck me was Flipkart’s valuation of $20 billion. This is the largest acquisition for an ecommerce company, and whether it is worth it or not is a difficult, but pertinent question. Justifying the value of a business has grown more complex, and is not a simple function of profits and losses. So, I’m positive Walmart will leave no stone unturned as far as pushing Flipkart’s growth is concerned.
In fact, Flipkart with its large loyal customer base is a household name in both urban and rural India. What Walmart will bring in terms of innovative technology and processes is what remains to be seen. This alliance will also pave the way for other international players to venture into Indian ecommerce.
The Indian ecommerce industry is projected to grow to $200 billion by 2026. Therefore, there is still a massive untapped market and Walmart may just have bought Flipkart at a good price.
The positive impact of this alliance on Indian ecommerce is manifold. There is now a precedent set of a great exit strategy. Most Indian startups would aspire to see a Flipkart-like exit. This will bring Indian startups in the limelight, and investor interest should rise.
I feel customers will benefit the most from this. Walmart has a history of focusing on unit economics, driving scalability and cutting out losses in a strategic way. They have a great opportunity to replicate the same in India and turn things around. Hence, the average Indian shopper can now look forward to better deals, frequent promotional campaigns and increased consumer centricity.
While there is a lot of good to come from this deal, there are also a few obvious downsides. Differences in corporate culture, organisational structures, and operational bottlenecks can have adverse effects. Moreover, Sachin Bansal’s departure will leave a large gap to fill. A founder puts a big part of himself and who he is into a company. He not only shapes the company’s vision, but also the work culture and growth path.
Overall, I see this as a harbinger of change and while there are some risks, I see a lot more promise. It’s an exciting time to be in business with giants who are shaping the future of Indian ecommerce.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)
Want to make your startup journey smooth? YS Education brings a comprehensive Funding and Startup Course. Learn from India's top investors and entrepreneurs. Click here to know more.