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    Flipkart Walmart Deal and Its Affect On Economy

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    aj
    Walmart acquired Flipkart, India's largest e-commerce company, to gain access to India's rapidly growing e-commerce market, which is projected to grow at a 36% compound annual rate over the next five years. Flipkart's subsidiaries in payments, fashion retail, and logistics can also help Walmart improve its earnings and growth. The acquisition may lead to increased competition and discounting as Flipkart uses its new funding to increase sales. Offline retailers may be forced to adapt to competition from online giants. The deal could also consolidate the market through further mergers and acquisitions between online and offline players.

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    Flipkart Walmart Deal and Its Affect On Economy

    Uploaded by

    aj
    65 views2 pages
    Walmart acquired Flipkart, India's largest e-commerce company, to gain access to India's rapidly growing e-commerce market, which is projected to grow at a 36% compound annual rate over the next five years. Flipkart's subsidiaries in payments, fashion retail, and logistics can also help Walmart improve its earnings and growth. The acquisition may lead to increased competition and discounting as Flipkart uses its new funding to increase sales. Offline retailers may be forced to adapt to competition from online giants. The deal could also consolidate the market through further mergers and acquisitions between online and offline players.

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    Walmart acquired Flipkart, India's largest e-commerce company, to gain access to India's rapidly growing e-commerce market, which is projected to grow at a 36% compound annual rate over the next five years. Flipkart's subsidiaries in payments, fashion retail, and logistics can also help Walmart improve its earnings and growth. The acquisition may lead to increased competition and discounting as Flipkart uses its new funding to increase sales. Offline retailers may be forced to adapt to competition from online giants. The deal could also consolidate the market through further mergers and acquisitions between online and offline players.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    65 views2 pages

    Flipkart Walmart Deal and Its Affect On Economy

    Uploaded by

    aj
    Walmart acquired Flipkart, India's largest e-commerce company, to gain access to India's rapidly growing e-commerce market, which is projected to grow at a 36% compound annual rate over the next five years. Flipkart's subsidiaries in payments, fashion retail, and logistics can also help Walmart improve its earnings and growth. The acquisition may lead to increased competition and discounting as Flipkart uses its new funding to increase sales. Offline retailers may be forced to adapt to competition from online giants. The deal could also consolidate the market through further mergers and acquisitions between online and offline players.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
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    Merger & Acquisition in the business world is not a new thing, it has happened before on

    multiple occasions, yet it is one of the most complex and expensive deals done between two
    or more firms. The main reason for the complexity is synergy between firms is hard to create
    and maintain. Merger & Acquisition in general terms refers to coming together of companies
    or assets.

    Indian E-Commerce Industry

    E-commerce is the activity of buying or selling products over the internet. The e-commerce
    industry has shown us the efficiency that comes with a properly integrated value chain. This
    power delivers value for customers and suppliers, and at the same time, it also creates an
    entire ecosystem of supporting industries that grow at the same rate as the phenomena itself.

    The most prominent E-commerce firm in India, Flipkart has been a loss-making company
    since its inception in 2007 by Sachin Bansal and Binny Bansal. The revenue for Flipkart in
    2017 was almost 200 billion INR the most for any Indian E-commerce start-up. Amazon is
    the world’s most significant E-commerce player, and it has competed with the Flipkart ever
    since it came to India some years ago. Their tussle has led to an almost demise of Snapdeal,
    once a prominent player in Indian E-commerce market. This competition has made both the
    firms to lower their prices to increase their sales and customer acquisition.

    The deal is expected to help generate Jobs in India and will also bring in more offers for the
    customers as Walmart has said it is going to target sales over Profitability at the initial stage.

    The reason why Walmart brought Flipkart

     Flipkart acquisition allows Walmart to benefit from a sizeable Indian e-commerce


    market, where growth rates are likely to be about 36% CAGR over the next five years.
     Flipkart’s subsidiaries such as in-house payments business (PhonePe), apparels
    business (Myntra and Jabong) and logistics operations (E-Kart) are assets, which can be
    utilized to improve earnings and growth.
     Walmart may use its expertise in the food segment to develop supply chain and
    infrastructure to capture the market in this segment.
    Possible outcomes of this deal

     Intense competition in retail and e-commerce space can be expected shortly, which
    will increase discounting pressures on the retailers and e-commerce players, as Flipkart
    is expected to use its fund in discount offerings to drive sales growth while competing
    against Amazon.
     Offline players such as Dmart and Future group may be forced to adapt their
    business models to compete with online giants.
     Consolidation in markets may appear, we may see both offline and online players
    coming together in the future.
     This deal may also give startups false hope of being Walmarted, so they may focus
    more on increasing client base and driving sales instead of finding a proper model to
    breakeven and attain profits.
     Smaller players in the Indian E-commerce sector would be either wiped out, or they
    would have to adapt themselves to enter niche segments to compete with these giants.

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