Amid various reports, it has been confirmed that retail giants like Walmart and Amazon are eyeing a deal with Flipkart to capture the Indian market in the expanding global contest between the two US-based firms.
As reported by leading websites like LiveMint, Walmart is already in talks to buy over 55% of Flipkart through a mix of primary and secondary share purchases in a deal that could value Flipkart at $21 billion. Amazon seems to have entered the scene and is sure to disrupt the deal.
Why Is India The Hotbed For Retail Players In The World?
It’s a no-brainer to mention that India is a relatively untapped market which is eyed by every retail giant in the world who wishes to stake a foothold in the hardcore competitive business.
Flipkart is India’s leading E –retail store and for any foreign retail company to widen it’s wings in India, partnering with Flipkart is the way to go.
For global retail giants like Walmart or Amazon to acquire a majority stake in Flipkart is to acquire a massive slice of the Indian market, which as per industry experts will grow at a compound annual growth rate of 30% for gross merchandise which would value up to $200 billion by 2026.
Also read: Did Chanda Kochhar Act Corrupt In Giving Massive Loan To Videocon To Benefit Husband Deepak Kochhar?
Why The Walmart-Flipkart Deal Might Be The Deal Of The Decade
As reported by Forbes, Walmart has been looking to dominate India’s retail sector for years, but India’s stringent FDI policy has prevented it from being able to achieve it’s objective.
While Walmart does operate close to 20 Best Price wholesale stores, the US based firm has avoided entering into a partnership with any other Indian retailer since its unsuccessful and unfortunate partnership with Bharti Enterprises which ended in 2013.
Bharti Enterprises Ltd. and Walmart had finally called off their joint venture after a brief, controversial and troubled five-year spell that was more infamous by allegations of investment rules violations than any viable gains.
What’s There In For The Customers?
If the deal between Flipkart and Walmart does go through, purchases of grocery and other copious consumer goods on Flipkart could be managed and delivered also via Walmart’s Best Price wholesale stores which in turn will massively improve product availability, product variety and delivery speed for the number one online retailer in India.
And moreover, a retail store partnership would be a boost for Flipkart’s customers who can order online and pick up their purchases at their nearby Walmart stores.
As clearly explained, the customers would be in for a treat in terms of comfort and price if the deal takes place which would increase the competition with Amazon.
In all probability, this should drive down prices of goods resulting in a price war.
Why An Amazon And Flipkart Deal Isn’t Likely To Take Place
After a successful entry in the online retail space, Amazon has committed at least $5 billion to capture the widely untapped Indian market in the e-commerce landscape.
If Amazon were to enter into an agreement with Flipkart, they would monopolize close to 80% of India’s online retail market. Thus, Flipkart would be able to double its market share and it’s position as India’s undisputed number one online retail platform.
This monopoly in Indian market probably would not happen as it would draw the attention of anti-trust regulator Competition Commission of India (CCI).
Whatever deal gets struck, it is the Indian customer who will gain in any circumstance.
Sources- LiveMint, Forbes, Business Standard + more
Are China-US Pushing The World Into Another Recession With Their Trade War? (Video)