Walmart bought 77% of India’s biggest online retail site, Flipkart for an amount of $16 billion. This is the world’s biggest ecommerce wrap up. Seeing this as a new digital marketing venture on part of Walmart, experts pose the question what effect would it have on Flipkart’s position in the Indian market.
The retail giant of Bentonville acquired Flipkart’s stake for $16 billion; this puts its market valuation over $20 billion which is INR 1, 34,800 crore, to be precise. Digital marketing experts talk about the strategy behind buying a company which has been suffering losses for quite a few years now.
“Flipkart suffered a loss of INR 19,854 crore in the year 2016 – 2017. Their losses rose faster than their revenues as huge as a percentage like 68%,” commented a marketing expert on this deal seal.
However, marketers explained that Walmart paid to have access to India’s grand arena of the retail market. It has not been able to make its way yet owing to the country’s regulations. Now, the media waits with bated breath to see how this turns out.
Reports show that investors of Walmart are skeptical regarding this entire acquisition which got reflected in its share market drop on 9th May, 2018. Its stock price went down by 3.1%.
“Studies show that mergers and acquisition failure rates have never seen the face of success. The failure rate ranges from 70% to 90% and only time can tell how Walmart fairs”, explained a Harvard Business expert.
Sachin Bansal, one of the owners of Flipkart, has sold his 5.5% stake for a billion dollars to Walmart. This occurred as Walmart wanted one of Flipkart’s founders on their board. Media reports suggest that back in 2016, Bansal had commented on how he wanted a nationalist tenure for Flipkart.
Despite such a global acquisition going on, the Indian government has not intervened in this process yet. Flipkart requires a stable financial ground to keep going, and as a result of this deal, it will be in the market for some time more.
Walmart’s strategy as explained by digital marketing pros shows that if it wants to make Flipkart stable and bigger than it is now, then numerous job opportunities will open up. Consumers are likely to benefit from the ecommerce deal.