Published: Fri, May 11, 2018
Hi-Tech | By Kristin Zimmerman

Walmart Makes Majority Investment in Flipkart

Walmart Makes Majority Investment in Flipkart

The Walmart-Flipkart deal is nothing but in long run a clear attempt to control & 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.

This deal will certainly have disruptive effects for the Indian markets and consumers. The deal, will give Walmart the access to Asia's third largest economy, where it could not set up brick-and-mortar stores.

Co-founders Sachin Bansal and Binny Bansal have always been the prominent. It is also touted that Jack Ma's Alibaba Group also intends to become the third player in India, making the diversity in choices apparent.

The Bangalore-based company has acquired a string of other companies in recent years, from fashion e-commerce company Myntra to mobile payment firm PhonePe.

"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 transformation of eCommerce in the market", said Doug McMillon, Walmart's President and Chief Executive Officer.

Traders say they are most concerned about predatory pricing and steep discounting by e-commerce firms with deep pockets thanks to foreign funding that could edge out smaller rivals. There will be an uneven level playing field to the disadvantage of retail traders.

Walmart, which operates stores under various banners in 27 countries outside the US, has faced strong headwinds in its expansion.

"Already offline trade is deeply hurt by e-commerce as there is no policy or regulatory mechanism to govern those companies", said Praveen Khandelwal, secretary general of CAIT.

"The owner can dictate anything". There is an argument that it would be much more hard for the government to control and regulate foreign-owned platforms.

"After assessing the deal, we will either represent to government or to the Competition Commission, or we will go to court", he added.

The party said proposal to allow FDI in India's multi-brand retail sector was stoutly opposed by the Left parties.

What does it mean for Indian e-commerce?

Officials have been advised not to comment on the Walmart-Flipkart deal, a senior government official said. While Accel has not sold all of its shareholding in Flipkart, which is worth around $1 billion, the partial exit will still rank among its best global exits.

With the Walmart deal, however Sachin Bansal stands to attain his billionaire status again, as he will offload his entire 5.5% stake in the company to Walmart, earning him about $1 billion, Bloomberg reported. The change in SoftBank's position is in contrast to the statement Son made in Tokyo to investors and journalists after his company's earnings call on Wednesday.

"We now have 21 stores and plan to open 50 stores in 4 to 5 years". Amazon invested an initial $2 billion in India when it entered the market in 2014 and has since pledged to spend $3.5 billion more.

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