Flipmart Walkart

- Shubhranshu Singh

Walmart is paying $16 billion for a controlling stake in Flipkart, breaking into India and securing a tactical advantage in its global battle of attrition with arch-rival Amazon. This is the highest price any foreign company has paid for a stake in an Indian company.The day of the announcement, Walmart stocks plunged some 4% and wiped off $10 billion of its market capitalization. The concern is perhaps on account of elusive sanity in chaotic P&L scenarios.

It is the largest acquisition yet by Walmart, where it has essentially taken over the company. With a certainty of continuing losses, it can only be seen in longer term rational constructs, as a peek into Walmart’s future. It isn’t an isolated move. There are synchronous moves elsewhere, such as selling its British unit, Asda and its traditional supermarkets.

So much has been written about the deal and every facet that it strikes me as odd that everywhere a presumption has been made on the reasons why the deal was important.

It is as if that’s a given. To my mind, it requires a spelling out.

Flipkart had net sales of $4.6 billion vs Walmart’s $485.8 billion of revenue. But India has 1.3 billion people, and is on its way to becoming one of the world’s top five e-commerce markets within the next five years. Walmart is betting on the fact that India’s e-commerce market will zoom from $38bn in 2017 to $200bn by 2027.