Battle for Flipkart- Either Walmart or Amazon will buy the stake??10 months ago Ramya Sayaboni
The two American Retail Giants Amazon and Walmart are in the race to buy India’s largest leading e-commerce firm Flipkart. This billion dollar deal and Flipkart choice will have an ultimate impact on India’s E-commerce Wing.
Walmart which is the largest leading multinational chain store, operating all over the world is interested to buy at least 40% stake in Indian e-commerce firm Flipkart. It is going to be the biggest deal for Walmart.And at the same time it is a direct challenge to Amazon and its CEO Jeff Bezos ,who has also had early talks with Flipkart and is offering a rival bid to Flipkart. Amazon is likely to make a 20$billion plus acquisition deal.
According to the recent mint report, If Amazon-Flipkart merger happens it could raise monopoly in the Indian retail market, and draw the attention of the anti-trust regulator Competition Commission of India (CCI).
In 2013 Walmart discontinued the agreement with Bharati Enterprises Limited and both the firms started operating as separate business formats. And recently in 2017, Walmart partnered with Chinese E-commerce firm JD.com. Its partnership benefited both the companies and customers. So, perhaps they will look to do something similar in India as well. This is the major step for Walmart because as it was looking to enter and tap the Indian retail market.
According to the report given by Economic times, Flipkart’s key investor Softbank Group of Japan is not willing to cash out this early as they see themselves as long-term investors in Flipkart. And even sources states that Google and Alibaba are also following up on this.
It is the Walmart who has triggered the talks and reason is quite clear. Walmart is one of the top brands in US and due to amazon it has lost most of its market in US and even in addition to that Walmart is very strategic in entering the Indian Markets and this particular deal is to safeguard itself from Amazon. If it’s not Flipkart there is no other way for Walmart to make some noise in the E-commerce business.And the markets are pretty billion dollar spaces which are attracting International giants to invest in Indian businesses.
On the other hand , what advantage Amazon gets out the deal is the sort of monopoly of market. With a complete mock down from Trump with his tweets, Amazon want to secure its position globally than just being an American company. If it fails to take advantage of this deal, 40% of the market owned by flipkart is not just lost but also other 60% of the market will be at risk as Flipkart gets backed by Walmart for aggressive moves.This is the possible reason why Flipkart is Inclined towards Walmarts deal.
But the deal is approximated to take over 55% stake in the company which might not sound good to its largest investor Softbank, eventhough the rest of the investors seems to be ready to sell out their shares in the deal.It all because of the advantage of the situation which is placing Flipkart at the valuation of 2o plus billion dollars.
No matter who wins the deal of Flipkart, but the monopoly of the giants will have a great impact on the Indian E-commerce startups and small businesses and begin the dictatorship in the markets which will leave the rest to just follow them as not left with any other choice.
Whom do you think will take up the race, Amazon or Walmart?? Share your views with us. We are happy to listen to you!!