Walmart Buys Flipkart – 3 Reasons Why It Changes Everything For Indian eCommerce!

This acquisition of Flipkart by Walmart is a gamechanger for the entire industry, and all stakeholders - entrepreneurs, ecosystem and the customers.

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Walmart Buys Flipkart

$250 billion worth Walmart, world’s largest retailer and world’s largest private employer has officially acquired Flipkart by paying mind-boggling $16 billion.

This way, Walmart now owns 77% controlling stake in the e-commerce portal (valued at $20 billion), which is hailed as the largest e-commerce deal to have ever happened, anywhere in the world.

No doubt, this is India’s largest-ever acquisition.

Things are right now moving at a fast pace, with doubt and apprehensions all over. Such is the uncertainty, that Walmart lost 4% of their share value, which translates to approximately $10 billion in market value, as soon as the deal was announced.

Shareholders in the US are complaining that Walmart has given up too much, in return for too little, by paying $16 billion for a website which a few years ago sold books online, and their founders delivered the books on their scooter.

We believe that the momentum of the deal is too big to ignore – The ripples which this M&A will create has the capacity to shake up everything for India’s digital & internet industry.

Such is the force & magnitude of this mega-deal worth $16 billion (Rs 1.04 lakh crore), that it changes everything for Indian e-commerce and digital sector.

Starting May 9th, when the deal was officially announced, Indian e-commerce sector will be known by these two definitions: Era before May 9th and Era after May 9th.

Here are three reasons why:

Changes for Indian Entrepreneurs & Investors

For a long long time, the neighbourhood Sharmaji, and the whole ilk of media and business analysts believed that IPO is the only way to make a successful exit for a company in India. A secondary sale was generally frowned upon, being termed as a gamble and a chance.

But now, the marriage of Walmart and Flipkart changes everything.

Co-founder Sachin Bansal has accepted approximately $1 billion for his 5.5% stake in the venture he co-founded 11 years ago with Binny Bansal.

Besides, Softbank, the largest investor, too, has decided to sell their 20% stake in the venture, and they will be getting $4 billion on their $2.5 billion investment into Flipkart. Accel will get $1.1 billion for their $800,000 investment as well.

This paves the path for so many other digital entrepreneurs and dreams to launch their ideas and do some smart work to attract the right eyes for a possible exit.

No, Walmart-Flipkart deal certainly doesn’t ‘assure’ that every other e-commerce portal would make a billion dollar exit, but yes, it certainly triggers that possibility.

Now, things are possible, which were impossible few years ago.

Changes for Indian Startup Ecosystem

The Indian startup ecosystem has received a new dose of hope with this mega-acquisition of Flipkart by Walmart.

To start with, the e-commerce sector has now received a jolt of energy, as the battle for supremacy is now between Amazon and Walmart. Paytm with the backing of Alibaba has the potential to become the wild-card, and disrupt the equations.

On top of that, Google too has chipped in with $1.5 billion for controlling 7% stake in the new Flipkart, powered by Walmart, and this changes so many things for the entire eco-system.

When bigger players with deep pockets enter the ecosystem, then everyone gets benefited – newer, most cutting-edge technologies are introduced, larger deals are finalized, and money seeps into the system.

Just imagine one Amazon inspired Sachin and Binny to create Flipkart and rewrite history – What all can happen when Walmart fights with Amazon to control the Indian e-commerce industry?

Possibilities become endless.

Changes for Indian Consumers

And finally, the last laugh will be of Indian consumers.

Especially those, who buy their products online.

Walmart is famous for their ‘Everyday Sale Business Model’, wherein massive discounts are given to customers, every day.

Now, with Google on their side, and Flipkart in their pocket, Walmart can trigger a new wave of discounts and offers never seen before in the Indian e-commerce sector.

If you thought that Paytm and Alibaba are the champions of discounted products, well, hold your breath – Walmart will make them feel expensive.

Overall, if we combine these three factors, then this acquisition of Flipkart by Walmart is a gamechanger for the entire industry, and all stakeholders – entrepreneurs, ecosystem and the customers.

Do you think Walmart did a smart thing by spending $16 billion to acquire Flipkart, compared to building their own portal? Do share your comments right here!

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