As Walmart Acquires Flipkart, Indian Inc Celebrates
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With Softbank confirming Flipkart’s buyout, Indian startup ecosystem just recorded one of the biggest exits of the venture capital-backed company.
While some applauded the deal, other stakeholders raised their concerns related to future of Flipkart's sellers, customer experiences, centralized competition between Amazon- Walmart, and most importantly, the impact on smaller e-commerce players.
On 9th April, soon after Softbank's CEO Masayoshi Son during an earnings webcast accidentally confirmed the deal, Walmart issued a statement on the Flipkart’s buyout wherein the former will pay USD 16 billion for an initial stake of approximately 77 per cent in the Indian e-commerce company.
This is Walmart's second stint to enter the Indian market after it parted ways with its partner – Bharti Group in 2013. The US-giant presently runs around 21 B2B Best Price cash-and-carry stores along with one fulfilment centre in India.
Announcing the deal, Doug McMillon, President and Chief Executive Officer, Walmart said, “India is one of the most attractive retail markets in the world, given its size and growth rate, and our investment is an opportunity to partner with the company that is leading the transformation of e-commerce in the market.”
Walmart also said it is actively looking for new ways to serve customers along with the moving speed. While, the Flipkart investment provides a unique opportunity, consistent to the retailer with the approach of looking for innovative ways to grow. “The investment transforms Walmart’s position in a country with more than 1.3 billion people, strong GDP growth, a growing middle class and significant runway for smartphones, internet and e-commerce penetration,” the announcement read.
Adrian Lee, Research Director, Gartner suggests that deal is part of Walmart’s global expansion strategy. “This should not be observed without mention to Alibaba Group’s intent to become the third player in India. With the massive user base, India looms as an attractive market for retailers. It’s currently estimated that 15 per cent Indian consumers will be shopping online by end of 2018, and the relatively untapped growth potential is attracting the commerce giants.
“Homegrown companies stand to benefit in the long run. As consumers are more attuned and comfortable to shopping online with e-commerce marketplaces, we see vertical specialists (largest categories being fashion, second electronics) benefiting. High value, more discerning consumers who want differentiated choices and unique offers will seek out specialists to fulfil this need,” he pointed out.
Indian Inc Applaud
Amid multiple concerns related to the deal, the Indian Inc and the venture capital community celebrated the deal as Vani Kola, Managing Partner, Kalaari Capital noted this deal as milestone not just for the company but also for the Indian entrepreneurial ecosystem.
A Landmark milestone for #indian startup ecosystem. Great outcomes for founders, employees and investors. Congratulations @_sachinbansal @binnybansal! The future of Indian entrepreneurship just got bigger and better. #Startupindia https://t.co/lndHAayFoS— Vani Kola (@VaniKola) May 9, 2018
Fellow entrepreneur Kunal Bahl, Founder, Snapdeal congratulated Flipkart's Co-founders Sachin Bansal and Binny Bansal. It was rumoured that Flipkart was keen to acquire Snapdeal but the deal didn't see the day's light.
While, Vijay Shekhar Sharma, Founder of Paytm, tweeted that the deal speaks about the openness of the Indian market.
This is 1 Lakh crore+, all cash deal !— Vijay Shekhar (@vijayshekhar) May 9, 2018
I call it, perfect answer to those who were dismissive of Indian startups in an open-for-all market. What an incredible outcome for every believer of @Flipkart . ?? https://t.co/uiG9gSTK7v
Ace investor Ronnie Screwvala, referring to his exit at the UTV Group, empathised with Sachin and tweeted an emotional message for the entrepreneur.
Can understand and relate to the Cross Road for @_sachinbansal - Great Value and wealth creation for many. . All the best for your future endeavours.— Ronnie Screwvala (@RonnieScrewvala) May 10, 2018
On the other side, Ananth Narayanan CEO of Jabong and Myntra (Acquired by Flipkart) expressed his excitement to be part of Flipkart 2.0.
Excited to be part of the next phase of growth for the Flipkart group! https://t.co/jbRiuOgiDw— Ananth Narayanan (@ANarayanan24) May 9, 2018