Flip side of Flipkart

RETAIL giant Walmart has finally acquired Flipkart, India’s biggest and most significant e-commerce startup. This is a win-win for both parties — Flipkart shareholders made a neat profit and the American company accessed a huge, but under-explored market. About seven years ago, when oil giant BP had acquired a significant stake in exploration assets in India, it had candidly said it had paid a premium of $2.5 billion mainly for market access. Similarly, Walmart had been making efforts to capture the lucrative Indian retail market, which is still inaccessible because foreign control of multi-brand offline retail is prohibited. With this acquisition, it will have direct online interface with the Indian consumers. The company already has a significant presence in India through its branded cash-and-carry stores. Now, it can aggressively tap the tech-savvy consumers who would prefer home deliveries over showroom visits. Consumers may expect interesting times that would shower unimaginable sales and discounts due to expected competition between Amazon and Flipkart in its new avatar.

This is, however, the time for Indian offline retailers to gear up. They must understand that the technology is all pervasive and no political power can shield them from technological advancements for long. They need to adapt to the changing needs of the market or else they would be gradually pushed out. Although policies have so far protected them from the onslaught of foreign retail chains at offline trade, soon they will face intense challenge from their online counterparts.  

Indeed, the two IIT-ians, who had set up an e-commerce startup years before the launch of PM Modi’s “Startup India” campaign, emerged as the symbol of Indian entrepreneurship. Walmart’s Rs 1.2 lakh crore ($16 billion) acquisition of India’s biggest online retailer is the world’s largest ever e-commerce deal. It will certainly boost entrepreneurial sentiment around the startup ecosystem, which urgently needs a booster dose because of the tepid response to the government-helmed “Startup India” campaign. Hopefully, the multi-billion dollar deal would also persuade the government to transform its startup policy from a mere catchy slogan to an agent of India’s economic change.