Money & Banking

Walmart-Flipkart deal is really big for start-ups, shoppers

Sangeetha Chengappa Bengaluru | Updated on August 20, 2018 Published on August 20, 2018

Shoppers can look forward to a slew of offers, and start-ups to investments

Indian shoppers and the start-up ecosystem will have much to cheer about in the wake of Walmart announcing the close of its $16-billion acquisition of Flipkart, India’s largest e-commerce marketplace, just 10 days after the transaction received the go-ahead from the Competition Commission of India.

With this acquisition, Walmart now holds approximately 77 per cent in Flipkart, with the rest held by Binny Bansal, co-founder of Flipkart; Tencent, Tiger Global and Microsoft.

For the start-up ecosystem, the acquisition is a proof that new ventures can attract huge investments in the coming days.

Great deals

Shoppers have a lot in store ahead of the festival season, which will continue through the year with Flipkart and Amazon going all out to drum up customer loyalty with deals, discounts, exclusives, cash-back, EMIs, buy-now-pay-later schemes, and exchange offers.

“The deal spells great news for the internet eco-system in India, and will bring in significant levels of investment and innovations changing the way Indians buy,” says Anil Kumar, founder CEO of RedSeer Consulting. Pointing out that online retail is still a very small fraction (2-3 per cent) of the overall retail market, he says: “While the deal will pose no mid- to long-term threat to small retailers, competition would definitely heighten for the existing online and organised retailers, benefiting shoppers in a big way.”

Shoppers will have a field day as Walmart and Amazon will do everything to stay ahead in India, a market they are betting on after their home turf. Shoppers can look forward to a Diwali bonanza throughout the year, says K Vaitheeswaran, co-founder of India’s first e-commerce firm, and author of Failing to Succeed.

Concurs Rajeev Banduni, co-founder of GrowthEnabler Global. “Shoppers will get better prices, products, shopping experience and faster delivery with Walmart bringing in its global Every Day Low Pricing strategy, introducing its private label products in India through Flipkart, and a fast-delivery mechanism to beat Amazon’s Prime.”

Walmart will start looking into the internal operations of Flipkart to see that they align with its global systems and processes, observes Arvind Singhal, CMD, Technopak Advisors.

“However, the battle for GMV will now shift to a battle for profitability as Walmart’s shareholders, who have committed billions of dollars, will look for returns.

“Consumer benefits will not be limited to discounts, they will get the right product assortment at great prices and a significantly better shopping experience,” he says. Striking a different note, Ashwani Mahajan, All India Co-Convenor of Swadeshi Jagaran Manch (SJM), believes this acquisition will not fructify due to compliance issues.

“The RBI has failed to perform its duty by passing on the buck of investigating FEMA violations to the Directorate of Enforcement, which, in turn, is sleeping over the matter. We are approaching the Income-Tax Department to investigate income-tax law violations and also the Finance Ministry to ask them to take action.

“Ultimately the law of the land will prevail.” SJM represents farmers, entrepreneurs and sellers to provide them with a level playing field to carry out business.

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Published on August 20, 2018
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