2019

Walmart’s acquisition of
Flipkart & the impact of
this deal on the Indian
ecommerce sector

GOURAV GUHA
DATE: 30/03/2019
Walmart acquired a 77% majority share in Flipkart in 2018. By market share, Flipkart is the
largest player in the e-commerce industry in India which is expected to grow by 1200% to $200
Billion by 2026 (30% CAGR) as per Morgan Stanley from $15 Billion in 2016. With rising
average wages and internet penetration, the ecommerce space is likely to be the most lucrative
business opportunity in India. The impact of the deal will be huge on the Indian ecommerce
industry which are discussed below:

Pros:

 Walmart, with its deep pockets, can support the Flipkart’s price-war with Amazon
India. This will result in low prices for the consumers.
 Funds for the ecommerce sector was drying up following Demonetization and GST
implantation. The entry of Walmart can pave the way for more foreign firms and
venture capitalists to invest in the Indian ecommerce players.
 Flipkart can use the expertise of Walmart in logistics and supply chain to further
strengthen its supply chain and the last mile connectivity.
 Walmart is looking to extend its supply chain arm through partnerships with around
600000 small stores. This can increase the market presence of smaller stores.
 Better supply chain can help Indian products reach the global market through Walmart.

Cons:

 Flipkart and Amazon have 76% market share in the Indian ecommerce sector. The entry
of Walmart will help further consolidate the market. This can result in smaller websites
going out of business.
 Walmart is likely to bring its on private label brands to Flipkart which will be a cheaper
alternative to the Indian brands. Indian Brands can lose business.
 Lack of competition from smaller businesses can help Amazon and Flipkart (backed by
Walmart) to create a duopoly which can be harmful in the future.
Sources:

 https://economictimes.indiatimes.com/industry/services/retail/whos-afraid-of-walmart-
flipkart/articleshow/65169402.cms?from=mdr
 https://indianexpress.com/article/explained/how-walmarts-acquisition-of-flipkart-may-
impact-the-indian-e-tail-market-5170569/
 https://www.bloombergquint.com/business/what-the-walmart-flipkart-deal-means-for-
indian-e-commerce-amazon-and-consumers
 https://economictimes.indiatimes.com/small-biz/startups/newsbuzz/has-the-flipkart-
walmart-deal-made-smaller-e-commerce-players-redundant/articleshow/64118245.cms
 https://www.mbauniverse.com/group-discussion/topic/business-economy/walmart-and-
flipkart-deal