Flipkart-Walmart Deal Will Remove False Dichotomy Between E-tailing And Retailing
All eyes are currently on the proposed Walmart-Flipkart deal. And why not? It’s after all the world’s biggest e-commerce deal.
Much has been talked about how the transaction will give Flipkart an instant leg up in the offline retail space, besides giving it an access to the required capital to take on global cash-rich rival Amazon, which is looking to strengthen its presence in India.
It’s a known fact that Amazon always had an advantage over Flipkart because of the “the unlimited cash it could plough into the growth of its Indian business,” said Rohan Bhargava, Co-founder at CashKaro.com, a Ratan Tata & Kalaari Capital backed portal. Now, “Flipkart can actually do the same and the battle for acquiring the next 100 million Indian online shoppers,” he adds.
The deal at $16 billion, has put the valuation of India’s best-known startup at over $20 billion. It is understood that US retail giant Walmart will own around 77 per cent of the Bengaluru-headquartered company that has been founded by Sachin and Binny Bansal in 2007. Back then, it was just a 2 people team.
The deal, if fructifies, will see founder Sachin Bansal exit the startup completely, thereby setting an example of a great exit story. “If the deal materialises, it will be the largest exit provided by any Indian startup ever. It is a healthy sign for the Indian start-up ecosystem where exits have been hard to come by,” said Bhargava. “Such transactions will also increase the confidence of many large and strategic investors eyeing Indian startups for investment.”
Now, that is all known. But, what’s pertinent to note is the fact that the deal will change the entire landscape of retail in India thereby forcing offline retail and e-commerce to merge into, what is now fashionably being referred to as ‘omni-channels’.
In other words, currently, there lies a false dichotomy between e-tailing and retailing. With the proposed deal, that is expected to go away. In the years to come, brands will matter irrespective of the channel that they take to reach the consumer, So, the retail channel — be it online or offline—may not be as important. After all, consumers today are increasingly getting more and more sophisticated and they are learning to value brands with in terms of functionality, relevance and design.
