Walmart and Flipkart Deal – GD Topic
WALMART AND FLIPKART DEAL
Do you prefer online shopping? I personally prefer it. It saves time and efforts though.
We are living in an era where everything is going cashless and online. Nowadays, people mostly prefer buying things online. And here comes into picture the reason for Walmart and Flipkart deal. Well, before knowing the reasons about Walmart and Flipkart deal, we should have some knowledge about Walmart and Flipkart individually.
Walmart is an American based retailing multinational company established on July 2nd, 1962 by Sam Walton in Rogers, Arkansas. It is one of the world’s largest e-commerce company. Walmart successfully expanded its firm in 14 countries which include UK, Mexico, India, China, Argentina, Chile, Canada, Brazil, and Puerto Rico.
Flipkart Online Services Pvt. Ltd. is an Indian based company established on September 5th, 2007 by Sachin Bansal and Binny Bansal in Bangalore, India. It is India’s one of the largest wholesale company.
“India is one of the most attractive retail markets in the world, given its size and growth rate, and our investment is an opportunity to partner with the company that is leading the transformation of e-commerce in the market.” – Walmart Chief Executive Officer, Doug McMillon
“There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.” – Sam Walton
STATISTICS – What Numbers have to Say?
- Walmart Inc. has agreed to pay $16 billion for a 77% stake in Flipkart, valuing India’s largest start-up at about $21 billion in what is one of the biggest acquisitions in the country.
- Walmart will invest $2 billion directly into Flipkart and buy the rest of its stake from existing Flipkart investors including SoftBank Group, Accel Partners, Naspers, and eBay Inc.
- Walmart has been present in India for about 20 years.
- Flipkart co-founder and chairman Sachin Bansal will leave the company and sell his 5.5-6% stake in the company.
- Walmart said that the Flipkart Group recorded a gross merchandise value of $7.5 billion for the year ended 31 March, an increase of 50% over the previous year. Flipkart’s net sales also jumped by 50% to $4.6 million.
DESCRIPTION – Let’s take a Deep Dive
Flipkart is India’s pride and the biggest e-commerce company. Over these 12 years, this company has grown a lot. You will also agree that whenever you want to buy something online, you search for either Amazon or Flipkart. Yeah, Amazon is the biggest competitor for Flipkart as well as for Walmart. So, Walmart applied ‘my enemy’s enemy is my friend’ kind of strategy and shook hands with Flipkart to grow its business more than that of Amazon.
Also, Walmart is a US based company and was known for its stores in the market. It had not expanded its business online. So, through Flipkart, Walmart entered in India to grow its business in the e-commerce sector also.
Flipkart holds a majority of Indian customers and hence has a lot of potential in the market.
But, will the Walmart and Flipkart deal create value for everyone?
Benefits of Walmart and Flipkart deal
- This deal will not only be beneficial for the two companies but also for the customers as they will offer many discounts and coupons for their products to attract more customers.
- In the war between two US companies i.e, Amazon and Walmart, Indian customers will get benefited as their utmost priority will be satisfying the needs and choices of the customers by supplying quality products.
- Bigger the company, bigger will be its impact on the Indian market. So, this will have a decent impact on the share market as well.
- More employment will be created in India as logistics and other facilities will increase.
- This will give confidence among foreign investors to invest more in Indian companies.
- Walmart’s use of supply chain management will encourage e-marketing, teleshopping, and other trading techniques.
Disadvantages of Walmart and Flipkart deal
- Flipkart can be in loss for a few years as the main focus of Walmart would be to satisfy the customers by adopting more pricing strategies.
- The ‘Make in India’ scheme is not followed through this deal as Walmart is a foreign-based company. So, the Indian retailers and small businesses will be at a loss and hence Walmart and Flipkart deal will have an impact in the Indian economy.
From the above discussion, it can be seen that Walmart and Flipkart merger has more positive impacts than the negative ones. The profit or loss cannot be perfectly predicted. It all depends on how well Walmart manages to integrate with Flipkart in India which is emerging as a high potential e-commerce sector. Walmart entered India with proper planning and strategies by understanding the requirements of India’s diversified consumers. It will be interesting to see, how Walmart’s Everyday Low Pricing (EDLP) strategy works in India.
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Author – Riya Chandra