Will Walmart-Flipkart deal change the face of Indian Startups forever?

Dwayne Harmon
May 13, 2018

CAIT said that Walmart-Flipkart deal is "nothing but in long run a clear attempt to control and dominate the much potential retail trade of India by Walmart through e-commerce which is only a bridge to reach out to offline retail market of India". "India is one of the most exciting markets in the world", said Bob van Dijk, Group CEO, Naspers.

"I believe it (the deal) will create a rumble in the industry".

"We are studying the deal and may resort to legal options based on the structure of the deal".

This deal adds new risk at a time (when) investors have been looking at Walmart to streamline their business. Online and offline are coming together, and there are many things to come. "We don't need a photo-op", he said.

The US company will be able to tap its current 21 stores in India for the online market and as warehouse locations for delivery, complementing Flipkart's network.

"This will further eliminate small and medium businesses, small shops, and opportunity to create more jobs".

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This negative impact will include "the incremental interest expense related to the investment", the Bentonville, Arkansas-based Walmart said in a filing with the Securities and Exchange Commission of the USA on Wednesday.

Ever since rumours about the deal got stronger, seller associations expressed their reservations towards the deal, fearing that it will lead to an uneven level playing field, causing domestic players to lose out. "Future investment will support national initiatives and will bring sustainable benefits to the country", says Walmart. "I don't want to put a timeline but we have analysis to show that", he said. Walmart's executives tried to argue that the benefit would go the other way-Walmart would learn from Flipkart-but wasn't that the point of acquiring Jet.com?

The CPI-M said it was common knowledge that Walmart sourced its products from worldwide markets and now these will be sold in India, further destroying the small scale and medium scale sector which is the largest provider of employment after the agricultural sector. "Make in India is something exciting to us", he said.

Walmart will likely step up sourcing from India for its global operations as the Flipkart acquisition gives it access to the huge supplier base of the e-commerce company.

"Given the deep pockets that both Walmart and Amazon have, they will commit to further investments to command the market". Co-founder Sachin Bansal sold his 5.9 per cent stake for an estimated $1 billion while eBay India made about $1.1 billion from its 6.55 per cent stake. "So we will continue to focus and stay invested and growing in this market (India) for now". Sellers have always been at loggerheads with online marketplaces Flipkart and Amazon on several issues including discounts sharing, commission margins, and alleged edge afforded to in-house vendors. The company would continue to scout for capability driven acquisitions but hasn't earmarked a budget for it.

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