Walmart's acquisition of Flipkart endorses the humongous opportunities in Indian market
The acquisition of Indian e-commerce biggie Flipkart by an even bigger American retail giant Walmart has had all observers and stakeholders discussing possibilities and futures. Industry insiders tell Fibre2Fashion what they feel about the deal.
The Walmart-Flipkart deal is going to shake things up. The world's biggest retail deal will impact the whole segment, the competitors and the consumers. It's an unnerving scenario for online sellers as Walmart could wipe them off completely. Walmart is a $500 billion American conglomerate, and is a direct threat to small businesses with ultra-low prices. Walmart might bring its own private labels to Indian consumers, via Flipkart. These products would be brought in at hyper-competitive prices, which will eat out the market and make it difficult for other sellers to operate.
US retail giant Walmart has forayed into the Indian e-commerce sector by acquiring a stake in Flipkart. This will be a game changer for the Indian market and especially for the small-scale vendors and retail sector. The packaging, logistics and warehousing industries are flourishing outrageously. India is on the edge to increase the variety and quality of products made available to consumers. Walmart entering India will be beneficial for the customers as they now will have access to the wide variety of products, services and organised online market. Small and medium size suppliers will generate a strong push to find new distribution avenues.
It's a second innings for all the players on e-commerce platform in India. The acquisition of Flipkart is definitely going to drive big change in Indian retail trading community.
Walmart plans to use Flipkart's expertise to expand globally and this would be a good challenge for the local trading community. However, with constant innovation and adaptation the local retail community can not only be at par but also beat overseas.
It is a good sign and may lead to a lot of benefits for the trading community if Walmart brings its supply chain capabilities with it. Given India's population and domestic demand, both small-time traders and Walmart can co-exist and rather feed off each other.
To begin with, Flipkart team has done an awesome job in bringing the world's largest retailer to India. The deal is a great endorsement of the large opportunity that Indian market presents and shows that there is a lot of money to be made in the Indian startup ecosystem. In the short term nothing much is going to change, but how Walmart approaches the Indian market will surely have an impact on the Indian e-commerce ecosystem in the long term.
The large retailer's presence is a positive for the Indian e-commerce industry because large global players entering the Indian e-commerce market signals high expectations of the entire Indian e-commerce market. India's e-commerce industry will grow, and a more positive environment will be created in India for e-commerce overall.
E-commerce and retail will exist side by side simultaneously as each has its own value and each complements the other. It is up to the customer to decide which channel he or she chooses to buy from. Walmart's huge presence won't change the fact that India is a unique market where people have different shopping preferences.
The garment retail business of Indian companies will not be impacted whatsoever from Walmart's majority stake in Flipkart, at least in the short term because the retail trade is already expanding at a healthy rate. As the retail sector is growing hand in hand with the digital sector in India, Walmart's majority stake in Flipkart is unlikely to have any impact on the revenues of offline retailers of garments and apparel.
An immediate impact of Walmart's greater footprint in India may be that more Indians may begin to purchase apparel products online. Because the buying behaviour of Indians is deeply ingrained, their willingness to shift enmass to buying apparel online is highly unlikely. This is one important reason why we believe that for the Walmart effect to be felt in India will take at least several years if not much longer.
Published on: 05/06/2018
DISCLAIMER: All views and opinions expressed in this column are solely of the interviewee, and they do not reflect in any way the opinion of Fibre2Fashion.com.