Walmart-Flipkart deal a boost for e-commerce platform in Indian consumer market
The Indian e-commerce market shall get major impetus as a result of Walmart-Flipkart deal. US retail giant Walmart Inc. has finally entered India by buying out Flipkart. The deal is worth $16 billion with purchase of India’s largest e-commerce firm, Flipkart Group. This seems a brilliant strategic move, long-planned in secret, that would allow the U.S. retail giant to manage the transition away from big-box stores globally. Yet, the truth is that the deal represents a second-best outcome — if that — for Walmart as well as for Indian consumers and farmers.
In the 11 years that Walmart has operated in India since 2007, it had failed to build up its own business. That’s not entirely the company’s fault. In fact, it’s a reminder that India remains, in some ways, as inhospitable to foreign businesses as China. For over a decade, successive Indian governments have denied permission to Walmart — and peers such as Carrefour SA — to open up their own stores. Foreign investors can enter into partnerships with local retailers. Walmart had entered India in partnership with Bharti Enterprises. Its joint venture with Bharti Enterprises. went bad a few years ago. And, in January, the possibility of having its own stores seemed finally to have closed, after the government made it marginally easier for single-brand retailers such as Ikea Group to open up stores in India but left restrictions on multi-brand retailers untouched.
However, as foreign direct investment (FDI) in supermarkets was finally permitted in 2012. It has given a major impetus to foreign players to set up base in Indian market. Consumers can look forward to more discounts on mobile phones with a stronger Walmart-Flipkart entity and a moneyed Amazon set for an intense fight for a greater share of the devices pie which is among the largest revenue generators for e-commerce majors, said analysts. Over the long run though, both parties will be able to build their strategies together as they bring their respective individual strengths in cash-and-carry and online on the table together.
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