The war for gaining the market share in an Indian E-commerce industry has led to a price and discounting war between two E-commerce giants i.e., Flipkart and Amazon. Flipkart started its operations in 2007 as an online bookstore and grown into one of the biggest e-commerce companies in India. Whereas Amazon turned their attention towards India after losing its market in China from Alibaba. Both companies deployed numerous strategies to win over the market. While cash rich Amazon is willing to put everything at stake to capture the Indian market at the other hand Flipkart was struggling due to its cash burn. Worried investors were speculating that they will lose their investment but in middle of 2017 U.S retailing giant expressed an interest to buy majority stakes in Flipkart. Walmart has been operating in India for quite a while but its growth is restricted due to stringent Foreign Direct Investment policies which prevents it from engaging into B2C business but they were only allowed to sell their offerings to the wholesalers. Amazon’s growing presence has been a concern for Walmart for a while and this was clearly indicated when Amazon took over Walmart in terms of Market Capitalization and share prices that indicated the everyone believes E-commerce is the way forward. Seeing this as a potential opportunity to strike back Walmart announced to acquire 77% stakes in Flipkart at a price point of $16 billion. Although Walmart investors expressed concerned about the sum that was paid for this loss making company the long term aspects when looking at the size of an Indian market look good. Can this deal between Walmart-Flipkart bring synergies to deter Amazon’s growth or it will turn out to be a costly facelift for Walmart?
|Industry||INTERNET BASED SERVICES|
|Analyzed Area||General management|