It’s the retail deal of the century! Walmart has wrapped up Flipkart acquisition for $16 billion, a valuation of over $20 billion, which makes it the world’s biggest ecommerce deal. Walmart will own around 77 per cent of the Bengaluru-based company in what is also being seen as the largest buyout for the US firm.
Online sellers on Flipkart are jittery because Walmart can wipe them off. Walmart, a $500 billion American behemoth brand, has a reputation of killing small businesses with ultra-low prices.
They fear that Walmart might bring in its own private labels via Flipkart to the Indian consumers, adding to competitive pressures and cannibalising the market and making life a living hell for other sellers.
Having for years tried to enter the Indian market amid tough restrictions on foreign investment, Walmart has another crack at the Indian market, four years after it broke its joint venture with Bharti for a cash-and-carry business.
While Flipkart has absorbed billions of dollars of investor money to rapidly grow its business, its main bait has been deep discounts. Walmart’s investment would give Flipkart not just additional funds to fight Amazon, but also arm it with a formidable ally with extensive experience in retailing, logistics and supply chain management.
Walmart has been engaged in a bruising battle with Amazon — in the US and elsewhere. War between an empowered Flipkart and Amazon will shrink the space for smaller players because it will ensure that prices, quality and delivery remain highly competitive.
The deal is going to shake things up. The world’s biggest retail deal will impact the whole segment, the competitors and the consumers. Source: https://bit.ly/2rvHof0