After quite a lot of hustle-bustle in the market, the Flipkart-Walmart deal is finally done and Walmart has formally agreed to buy controlling stakes of Flipkart – covering more than 70% of the stakes for $14.5-15.5 billion.
Indian e-commerce giant Flipkart’s acquisition has hogged itself all the limelight, and finally the deal is formally complete as American retail giant has formalised the agreement of buying 70% of Flipkart’s stakes. The deal, probably the biggest in the e-commerce space, was confirmed by Softbank CEO Masayoshi Son – which is the largest investor for Flipkart. Currently, Walmart is in process of completing the deal with $14.5-15.5 billion for an approximate valuation of $20 billion for the Indian ecommerce giant. Alongside Walmart, Google’s parent company Alphabet will also by 10 percent of Flipkart’s shares worth about $1.5-2 billion.
While the word “acquisition” is being used, some researchers see it to be more of a partnership than an acquisition, which will allow Flipkart to continue operating in a near as-it-is fashion. The deal will actually be beneficial for Flipkart because Walmart “will be able to extend this expertise to managing physical goods in the digital world – a strength that Flipkart lacks. Besides this, the Flipkart-Walmart deal will also have huge impact on some of the Indian e-commerce site’s rivals – especially Amazon India. The deal might also impact other online retailers like Paytm Mall, TataCliq, Alibaba – just to name a few.
Walmart has for years tried to enter India but has remained confined to a ‘cash-and-carry’ wholesale business amid tough restrictions on foreign investment. It currently operates 21 such stores in India and has extreme experience out of India. However, Walmart has a reputation of killing small businesses with ultra-low prices – which means, the fate of online sellers is jittery and they could be wiped off. Perhaps, intense competition between e-commerce sites can only come as good news for us consumers because in a quest to constantly outdo each other, consumers could expect deeper discounts, more product categories, and also availability of international brands.