Blockbuster deal

With the Walmart-Flipkart deal, there is now a strong case for framing a national policy for e-commerce

AuthorPublished: 11th May 2018  12:46 am

The $16-billion Walmart-Flipkart acquisition deal, touted as the world’s largest in the e-commerce space, reflects the global acknowledgement of Indian innovators’ prowess and serves as an inspiration for the startups. The marriage between the world’s largest company and India’s trailblazing e-retailer may well be a defining moment for the e-commerce industry, offering a wide array of exciting opportunities to take it to the next level. The 11-year-long entrepreneurial journey of Flipkart founders Sachin Bansal and Binny Bansal, from a modest two-bedroom rental office to emerging as the country’s largest e-commerce company, represents a unique success story in the post-liberalisation India. The deal values Flipkart at $21 billion, catapulting it among the most valued internet startups in the world. While the blockbuster deal needs to be celebrated for all the positives that it can bring, there are certain fears that need to be addressed. For instance, a section of traders and retailers fears that the mega deal might create an uneven playing field and stifle competition. Some also see it as a back-door entry by Walmart to dominate retail trade in India in the long-run. There are also apprehensions that the entry of the American retail behemoth will only benefit venture capitalists, investors and promoters but not retail traders. There is an argument that it would be much more difficult for the government to control and regulate foreign-owned platforms.

The fears that global retailers will kill local brick-and-mortar players and spell doom for neighbourhood kirana stores are largely misplaced as the experience has shown. Given its focus on timely delivery, warehousing and logistics management, the online retailing market has the potential to create huge employment. Already, it has proved to be a life-support for small and medium vendors who are now able to access customers they could not have dreamt of reaching out to a few years ago. The farm sector could be another gainer, given Walmart’s skills of direct sourcing at the farms and selling fresh groceries to consumers. Walmart’s investment in Flipkart is largely reflective of the maturity of the Indian e-commerce system. The deal will compel competitors like Amazon, Aditya Birla Retail, Reliance Retail and Future Group to up their game, ultimately benefiting customers. Increased competition will mean more benefits for the customers. The credit for infusing momentum into e-commerce space must go to Flipkart as it has been a trendsetter in many ways. The Indian e-commerce market, tipped to touch $230-billion-mark by 2025, is expected to witness further consolidation and acquisitions of specialised e-commerce companies. There is a strong case for framing a national policy for e-commerce and constituting a regulatory authority to oversee its business in the country.