Flipkart’s ‘Ecosystem Businesses’ True Advantage To Walmart
In today’s techno-savvy era, technology is revolutionized in every nook and corner of the globe, which has a direct impact on the online business. Walmart observes that Flipkart’s “ecosystem” of organizations includes Myntra and Jabong, which became a part of its mega USD 16 billion deal. The company deals with an Indian company which could be a true benefit for the US-based retail marketplace. Post this agreement, Walmart has become the largest shareholder in Flipkart.
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The President, Executive Vice President and the CEO of Walmart international Mr. Judith McKenna said in an investor’s conference that the most of the company’s varied interests are rapidly uplifted at 2 percent penetration. By looking forward to this deal, Walmart is very much influenced to take advantage of it and they had signed its one of the largest deal in the month of May.
According to this deal, company agreeing to pay up $16 billion for 77 percent of Flipkart. Also, they expected three members on the 10 member board. In the recent times, Flipkart and Walmart inked a record breaking deal. Now, the company waits for the next step’s configuration which is a transaction approval from the CCI (Competition Commission of India). In a recent survey, it is reported that, the CEO of Walmart firm, he believes that Flipkart is not only a marketplace to shop or an e-commerce retailer; it is a platform which creates ecosystem and also an advantageous arena which operates within the market. It is also admitted that, Flipkart is one and the foremost well-known merchandise site which covered the biggest part of the business field. Mr. McKenna points out that, Flipkart’s clothing as well as Myntra and Jabong are flourishing everywhere and its logistics business eKart and its payment app is PhonePe.
Ekart which is known as Flipkart Logistics is a Bangalore based company operating in more than 800 cities. It already does 0.5 million deliveries annually. “It is a unique logistic network” McKenna added. Walmart is planning to subject to regulatory approvals and also expects that the deal is finished till the end of the calendar year. There are plenty of traders in India who opposed to this approval of FDI (foreign Direct Investment) and the foreign organizations are not allowed to start a multi retail system in the country yet.
A well-known American Retailer which has back to back cash and carry operations in the country like India has a separate business from Flipkart. This company clarified to work in India in futures (which have a marketplace model). India allows 100 percent FDI to both of companies via marketplace model.
Mr. McKenna is very much impressed to see the online marketplace Myntra and Jabong working as in parallel speed and they are interested to provide overall e-commerce business as well. Flipkart is uplifting and soon it will reach at the pinnacle of success. Also, it could change the e-commerce landscape in the nation (India) in plethora of ways. In fact it would be the big deal for the startup landscape.
Walmart changed its ecosystem to buy Flipkart and here are some reasons- For the startup Industry in a country like India, it has been constrained by the less exits. Exit points are IPOs, acquisition or a secondary sale. To quote an epitome, MakeMyTrip, Just Dial and Bharat Matrimony are one of them. On the other hand, by talking about Walmart, it’s been 2 decades for a new entry in the Indian Retail market.
The basic drawback is they can’t do offline work because Indian retail market place has no FDI in multi-brand retailing. So, they just left with the one and the foremost option Flipkart that is the reason to pay bulk of premium. For Flipkart, the deal is not based on money and they did not have to worry with the backing of Softbank. However e-tailing is change and they proceed with the categories of phones and fashion whereas e-tailers wants to cater the household stuff. Walmart always play an crucial role because they are calibre to compensate the prices and flood the market, and Flipkart is weaker than that.
CAIT (Confederation of All India Traders) is negotiating all the claims and there is do and die situation in Indian trade market. If the government clears the deal, the association’s plea has fallen on deaf ears which directly gives a platform to Walmart and encourage them to buy Flipkart. By this procedure, Walmart enters indirectly into retail trade. The deal is still on the pending because CCI not ready to confirm and it is reported that, according to PTI, CCI plans for the structural changes to the deal. By this, they can address the competition among marketplace. The deal is very valuable for the Indian e-commerce firm which is about 11 years old now by splurging USD 20.8 billion on it.
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