Daily Management Review

Amazon And Walmart Begin Their Tussle For The Indian Retail Market


05/13/2018




As the largest rival in the retailing industry for Amazon in the United States - Walmart. Joins hands with the largest e-retailer in India – Flipkart, the largest e-retailer in the world has a powerful new challenger on the world stage.
 
$16 billion will be spent by Walmart to acquire 77% stake in the most valuable startup of India – Flipkart which has given a tough fight to Amazon’s desire to capture the largest growing online market in the world – India.
 
This is also perhaps the reason that the exploits of Walmar4t in India with respect to its e-retailing ambitions were repeatedly attempted to be halted by Amazon by counter offer for Flipkart. 
 
While Amazon might have lost out on its battle for Flipkart it is still very much in the war in on the Indian turf – a market that has the potential to grow four times in the in size in the next decade.
 
"India is too important for either company to ignore. There is no other opportunity as big," said Siddharth Shekhar Singh, an associate dean and professor of marketing at the Indian School of Business. "The competition between the two would certainly intensify in India."
 
Amazon apparently has a clear-cut strategy for the Indian market and its CEO Jeff Bezos has already announced investment plans worth $5 billion for the company in the Indian market. 
 
According to data available from the Indian government, almost $3 billion already been invested by the company in India. According to media report, $400 million was the latest capital infusion by the company in the Indian market.
 
According to Nainika Singh, a consumer analyst at BMI Research, Amazon's recent investments are "indicative of its continued strategic focus on the Indian market."
 
The Indian e-commerce market is anticipated to notch a growth rate of about 19% between 2017 and 2021 growing from about $48 billion to over $80 billion in that period according to BMI research.
 
And the growth trend is expected to continue further. According to estimates of Morgan Stanley, by 2026, the Indian market could be worth as much as $200 billion.
 
Groceries would be one critical segment where the looming battle would be fierce. While Amazon is already into groceries after it got approval from the Indian government last year, Flipkart is planning an expansion in the segment.
 
"Walmart has the expertise needed to help Flipkart build its online grocery platform, which is still in the nascent stages," said Singh of BMI Research. "However, Amazon is well positioned as well," she added.
 
On the other hand, Walmart has expended a large chunk of its reserves in purchasing Flipkart. Compared to the money spent on purchase of Jey.com in 2016, the Flipkart deal is 5 times more expensive.
 
According to Satish Meena, an analyst at Forrester Research, Walmart would require to spend more to augment supply chains and logistics as part of "a long term strategy to compete with Amazon."
 
"Walmart is going to be under pressure here due to the premium they paid for this deal for access to the Indian market," said Meena.
 
(Source:www.money.cnn.com)






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