Walmart and Flipkart have made the largest ecommerce deal ever, with Walmart buying 77% of Flipkart’s stake for a total of $16 billion. While this was a huge success to Flipkart’s owners and stakeholders, the Indian ecommerce marketplace is going to change significantly due to this acquisition.
The Walmart-Flipkart company will own a 90% share of the ecommerce market in India, which troubles other retailers and Indian small business owners. Researchers and analysts have made a number of speculations about what could happen to Indian ecommerce by the time Walmart completes the deal with Flipkart by the end of 2018.
Benefits to Walmart and Flipkart
Walmart entered the ecommerce market later than its competitors, so it still doesn’t have all the expertise of what it takes to be successful in selling online. However, Flipkart was known as the “Amazon of India” when it was founded in 2007, and it remains the most popular online retailer in the country. Combining these two companies will be a win-win for both parties as Walmart can help Flipkart grow in different sectors, such as grocery, and Flipkart can assist Walmart in the details of online retail. Flipkart also has valuable knowledge about consumer needs and trends that Walmart can greatly benefit from.
Benefits for Online Shoppers
One analyst reports that until very recently, most online stores in India were run and managed as technology companies. Walmart’s strategy of viewing online stores from a retailer’s perspective will help change the format of India’s ecommerce marketplace. According to analysts, Walmart will likely set up better back-end management for online brands around India, and teaming up with Flipkart means that consumers can expect several benefits
- Low prices. Walmart’s products in general merchandise and efficient operations will translate to cheaper products for Indian consumers. Most of India’s online shoppers are middle-class and usually search for the best deals. Competition from Amazon will also ensure that prices stay low.
- Exceptional delivery standards. Online shoppers in India naturally want better customer service and faster delivery of their products. In America, Walmart only hires delivery drivers who have at least three years of driving experience and 250,000 total miles under their belt. Walmart’s quick and careful delivery system in India can rival that of Amazon Prime and can lead to increases in the number of online shoppers.
- More variety. Walmart is all about convenience, and it’s obvious from looking at their vast array of products that they try to provide something for everyone’s needs. When Walmart enters the Indian marketplace with Flipkart, there will be countless items and options for customers.
Walmart-Flipkart vs. Amazon
Walmart and Amazon have been fighting for retail dominance for over 20 years in America, and their competition has been steadily growing across the globe. Analysts suspect India will be the next “battleground” between Walmart and Amazon due to India’s booming ecommerce industry, which is suspected to reach $100 billion by the year 2020. Experts believe Walmart will have an advantage over Amazon due to its huge investment in Flipkart, but many worry about what this will mean for other online retailers in India.
Small Businesses and Online Retailers
Walmart and Amazon both focusing their efforts in India means that soon, the ecommerce marketplace will be mainly controlled by these two giant companies. Walmart doesn’t have a good track record for small businesses, either; just 2 years after the company was founded, 82 local stores went out of business. As Amazon and Walmart struggle to be the most successful, small businesses and online start-up companies are likely to falter.
Many small businesses can’t compete with the low prices and convenience that Walmart and Amazon can offer customers, and some fear that Walmart may also bring in their own private label through Flipkart. One spokesperson from the All India Online Vendor’s Association says, "These products would be brought in at hyper-competitive prices, which will cannibalise the market and make it difficult for other sellers to operate.” Online retailers should prepare for the upcoming ecommerce battle between Amazon and Walmart-Flipkart by fine-tuning their websites, selling products through different channels, or by finding other alternative selling options.