Can Walmart-Flipkart Deal Change India's E-Commerce Landscape?

by Sohini Bagchi    May 09, 2018


Amidst suspense, speculations and industry buzz, Walmart finally wrapped up its much-awaited Flipkart acquisition for $16 billion, which makes it the world’s biggest ecommerce deal. With this buyout, Walmart will own around 77% of Flipkart, as the deal values the Bengaluru-based e-commerce firm at $20.8 billion. More importantly, it intensifies the battle between Walmart and retail giant Amazon in the emerging Indian e-commerce market.

Indian e-commerce is projected to reach $200 billion by 2026 from $38.5 billion as of 2017, according to global financial services company Morgan Stanley, as smartphones  become more affordable and mobile data becomes cheaper, making online shopping increasingly accessible. Capturing a share of this growing market via Flipkart will be Walmart’s best chance of establishing its foothold in India, especially after the Chinese opportunity is already taken and its arch rival Amazon has a very strong grip in the US. Walmart will be able to access Flipkart’s loyal customer base, a well-established e-tailing delivery system and benefit from its learning of being a category creator in India. On the other hand, the deal will give Flipkart an instant leg up in the offline retail space and a strategic investor with great learning.

Read more: Trends That Will Shape India’s E-Commerce

The dealmakers

Sachin Bansal, who had co-founded Flipkart with Binny Bansal in 2007, would reportedly exit the company after the deal. Japan’s SoftBank, an investor, will also exit the company by selling its entire 20 per cent stake in Flipkart, which now sells 8 million products across 80-plus categories and has 100 million registered users. On the other hand, Walmart had entered India in 2009 through a joint venture with Bharti Enterprises and later took full control of that venture in 2013. It currently operates about 20 wholesale stores in the country that serve small businesses.

For Walmart, the Flipkart deal will offer a big advantage in terms of presence in the Indian e-commerce market. Acquiring a stake in Flipkart will help Walmart tap into the India’s retail market without building stores. India is the next big potential prize for global retailers after the US and China, where foreign retailers have made little progress against Alibaba Group Holding.

“India is one of the most attractive retail markets in the world, given its size and growth rate, and our investment is an opportunity to partner with the company that is leading transformation of e-commerce in the market,” said Doug McMillon, Walmart’s president and chief executive officer. “As a company, we are transforming globally to meet and exceed the needs of customers and we look forward to working with Flipkart to grow in this critical market. We are also excited to be doing this with Tencent, Tiger Global and Microsoft, which will be key strategic and technology partners. We are confident this group will provide Flipkart with enhanced strategic and competitive advantage. Our investment will benefit India providing quality, affordable goods for customers, while creating new skilled jobs and fresh opportunities for small suppliers, farmers and women entrepreneurs.”

Transforming the e-commerce ecosystem

Rohan Bhargava, Co-founder at, Ratan Tata & Kalaari Capital backed Cashback & Coupons Site remarked, “The Flipkart-Walmart deal is set to change the competitive landscape of Indian e-commerce. The big advantage that Amazon always had over Flipkart was the unlimited cash it could plough into the growth of its Indian business. Now with Walmart on Flipkart’s side, Flipkart can actually do the same and the battle for acquiring the next 100 million Indian online shoppers.


According to him, “It is a healthy sign for the Indian start-up ecosystem where exits have been hard to come by. Such transactions will also increase the confidence of many large and strategic investors eyeing Indian startups for investment.”

Flipkart, which is competing with Inc for market share in India’s e-commerce market, gained online fashion market dominance with the 2014 acquisition of Myntra, which subsequently bought rival Jabong.

Read more: Flipkart Vs. Amazon: Here’s What The ‘Big’ E-Commerce Battle Reveals [Infographic]

Adrian Lee, Research Director, Gartner expects the status quo to remain within the year after the Flipkart-Walmart deal is completed. This is an extension of Walmart’s global expansion strategy. This should not be observed without mention to Alibaba Group’s intent to become the third player in India.”

“I see the competition getting more aggressive as Amazon counteroffers Walmart for a stake in Flipkart. Both have their own sizeable cash reserves, and the outcome in India will determine the access to its growing middle class consumers for dominance, outside of the U.S.”

Amazon strikes back

Meanwhile, Amazon founder Jeff Bezos has committed investments to the tune of $5 billion for the Indian market. Earlier, Amazon reportedly made a bid to acquire a controlling stake in Flipkart, even though the latter [founders and investors] preferred to go with Walmart.

Experts believe the fresh funds will hugely benefit, which has been aggressively investing in expanding infrastructure and adding solutions to enhance consumer and seller experience.


At a recent AWS event, a senior India spokesperson told CXOToday that India has been and will always be one of Amazon’s prime market, as a chunk of its business comes from the region. “We will continue to invest in the necessary technology, partners and infrastructure to grow the entire ecosystem,” he said, adding that in all this, the key focus would be ‘our consumers,’ who come first in all our endeavors.

As Amazon and Walmart both continue their presence in the domestic market, India is poised to increase the variety and quality of products made available to consumers. 

Going forward, the need to connect with consumers will become more intense, and online will continue to evolve as an increasingly attractive channel for distribution. 

“Consumers however should not expect significant changes in their shopping experience. Only user choice should be improved, with a greater range of Walmart private labels differentiating the merchandise. Flipkart will diversify its inventory to attract more Indian consumer segments that still haven’t started shopping online,” commented Lee.

Speaking about other (small players) in this category, Lee said, “Smaller players constantly face a problem of scaling up their operations. However, this does not mean that they will be forced to exit. The smaller players in many cases are more agile and open to new business models. They should concentrate on specialization within their domains to build up a valuable cache of users seeking differentiated retail experiences,” summed up Lee.

As far as the Walmart-Flipkart deal is concerned, it is clearly a big deal for Flipkart and its founders. However, it is still early days to assess the net gain for Walmart as it is in an experimental mode to win a share of Indian online retail market through Flipkart.