Walmart’s $16 Billion acquisition of Flipkart signals the beginning of an interesting phase in Indian eCommerce. For Walmart, the Flipkart acquisition was critical, and comes at the right time as Indian ecommerce continues to gain strength, with increased customer spending online. As per IBEF estimates, the Indian eCommerce sector is slated to reach US$60 Billion by 2020.
The Flipkart acquisition enables Walmart to tap a large, successful ecommerce platform, with a ready consumer base, and a massive logistics network. For Flipkart, it will stand to gain from Walmart’s deep expertise in retail infrastructure, supply chain capabilities, marketing, and from its large network of 21 operational stores, and 50 more planned stores in the coming years. These stores could act as a customer touchpoint for Flipkart, enabling access to a warehouse and as delivery point.
The Walmart-Flipkart deal means Amazon’s technology-led ecommerce business is in a tough spot than ever before. It lost out on China, and its future in India will be marked by a deadheat. Amazon faces a rejuvenated Flipkart having deeper pockets than before, and with much more organized retail capabilities spanning both online and offline.
Beyond Walmart-Flipkart and Amazon, Alibaba is the third major player through its investment in PayTM. It has a marketplace, and also includes financial offerings and logistics infrastructure.
The Smartphone Battleground
The smartphone category is a major revenue generating segment for both Walmart-Flipkart and Amazon, and they will both go all outs to attract smartphone brands on their platform. The online play will no longer remain the same, and we would see new trends shaping the ecommerce marketplaces. There would be more attractive discounts, and, more selection of mobile handset brands available. Leading upto the Flipkart acquisition, both Amazon and Flipkart were locked in a fierce battle in the mobile handsets segment.
Over the short-term, the smartphone brands would be in a better position to get good terms for doing business. As far as platforms go, the WalMart-Flipkart entity with its vast phygital capabilities would be at a pole position to attract more players to their platform. Smartphone brands would realize that Walmart-Flipkart offers them access to new Greenfield centres, and a new aspirational customer base which has limited access and exposure to online stores.
What do customers benefit from?
For Indian consumers would stand to gain immensely. From a mobile handset devices point of view, Indian consumers would gain from by Amazon and Walmart-Flipkart with deeper discounts to gain and retain customer loyalty. Beyond the initial phase, the focus of Walmart-Flipkart would shift from offering discounts to delivering better service quality as well as enabling seamless service across borders.
Closing Thoughts: Dominance of the Duopoly?
Over the coming years, the India market will provide plenty of opportunities for growth for all three market players. The tough battle between Walmart-Flipkart and Amazon will not just be about gaining market share, but tapping opportunities for growth in one of the world’s most exciting high-growth markets.
Beyond the initial honeymoon phase and the short-term bruised battle for getting brands and customers onboard their platforms, the strong duopoly would lead to a tough challenge for smartphone brands, and they would have to be wary of it. Young and niche smartphone brands would need to be pragmatic, and find ways to engage better with the two eCommerce platforms.
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