By Mukund Ramachandran, CMO, Dynamic Yield
Walmart and Amazon have generated no shortage of buzz in recent weeks with their tug-of-war over Flipkart, India’s fast-growing e-commerce startup. Last week, Walmart prevailed, announcing its acquisition of Flipkart in a $16 billion deal.
The landmark acquisition provides Walmart entry to one of the world’s mostly rapidly growing e-commerce markets: Morgan Stanley projects that India will reach $200 billion by 2027, and with nearly half of the country’s 1.3 billion people younger than 25, it’s clear why Walmart and Amazon smell opportunity.
But what will the deal mean for Flipkart? For years, analysts have pointed to the growing presence of multinational corporations here as evidence of India’s “Americanization.” Will Flipkart become Americanized – or does the deal not fit so neatly into such popular narratives?
Grumblings that Walmart overpaid for Flipkart – a view that helped drive down Walmart’s shares by 4 percent the day it announced the deal – would seem to suggest zealous Americanization on the retail giant’s part. In its quest to expand its global footprint, the thinking goes, Walmart showed eagerness disproportionate to what it will receive in return.
In the inevitable offline retail that will ensue from this partnership, Walmart is poised to not only help Flipkart modernize its overall supply chain, but also heavily influence how its new Indian subsidiary functions as a business. Walmart will infuse its technology and know-how in retail operations, with its Indian operations likely continuing under the Flipkart. In turn, Flipkart offers vast customer data, elite talent, and local know-how – and a new testing ground for Walmart as it expands its operations into other emerging economies.
Is this enough to justify the jaw-dropping price of the deal?
Relative to almost every other major market in the world, brick and mortar retail remains far more prevalent than ecommerce throughout India. For Western behemoths accustomed to sitting on treasure troves of consumer data, this only enhances Flipkart’s appeal – and helps explain why Walmart and Amazon competed so fiercely for it. Flipkart leads the burgeoning Indian ecommerce market in customer data and is renowned for innovating at a rapid pace and creating quality customer experiences, making it a tremendously valuable entry point for Walmart.
Harnessing its user data to gain in-depth insights into its customers, their pain points, interests, and needs, Flipkart has stressed the creation of seamless customer journeys, mapping ideal journeys and viewing technology as a conduit for materializing that vision. This data-savvy, customer-centric approach has helped cement Flipkart’s position atop the Indian e-commerce market.
Far from fitting neatly into a simple narrative of Americanization, the Walmart-Flipkart deal could spur significant changes in the operations of the former, in addition to the benefits Flipkart accrues. As Walmart looks to enhance the customer experience and beef up its e-commerce presence, Flipkart’s user-centric approach promises to be highly instructive, informing its e-commerce operations in India and beyond.
With a population more than 3.5 times larger than that in the United States, the Indian market is a source of tremendous potential. As that potential is unleashed with greater digitization and an expanding middle class, we may soon be hearing about the Indianization of American companies.