-Says BBC
BBC adds, Flipkart, founded in 2007 by Sachin Bansal and Binny Bansal (no relation), is India's biggest e-commerce company and has had high-profile investors including Microsoft, Tencent and Softbank.
"India is one of the most attractive retail markets in the world, given its size and growth rate," Walmart's president and CEO Doug McMillon said in a statement.
Walmart is betting on the fact that India's e-commerce market, pegged at a modest $38bn in 2017, is expected to grow up to $200bn by 2027.
E-commerce currently makes up less than 4% of the retail market in India, but that's predicted to change as the number of Indians using smartphones (and the internet) increases rapidly in the next decade.
Although Walmart has 21 "cash-and-carry" wholesale stores in India that sell to businesses, it has no other retail presence in the country. So this acquisition allows the company to jump straight into a small but growing e-commerce market with about 100 million customers. (Read more at BBC)
ET adds, The common wisdom now is that with Amazon and Flipkart dominating the ecommerce space and Alibaba-fuelled Paytm also in the market, investor interest is shifting to ideas away from this area.
How Walmart’s $16 billion buy of Flipkart will change India’s startup map
In its article ET wrote adds up, The handsome returns from the sale of Flipkart, which was set up a decade in a flat in Bengaluru, has indeed lit up the market. “This is a watershed moment for startups in India,” Binny Bansal, executive chairman and group CEO of the firm, said a day after the $16 billion deal was announced.
The Flipkart-Walmart combine and Amazon have, according to industry estimates, 80% of India’s ecommerce market. This fact has made industry watchers realise a duel in ecommerce, however lucrative the idea, may be a losing proposition. “If you pitch another ecommerce idea to investors, you might be laughed out of the room,” says Bala Parthasarathy, founder of MoneyTap, a consumer lending platform.
As funding revives and new segments become viable, it then seems like a natural progression that entrepreneurs are now looking beyond e-commerce. (Read more at ET)
Now the question of the hour is "Is SoftBank Doing A Flip-Flop?" Lets read a coverage by inc42.com here.
in42.com adds up, SoftBank, a major shareholder in Flipkart with a nearly 23.6% stake which it bought for $2.5 Bn just last year, has about 10 days to decide whether or not it wants to sell its stake and, if yes, how much. It may also decide to stay in Flipkart and become the second largest stakeholder following the acquisition by US retail giant Walmart.
Short-Term Tax Burden Main Reason For SoftBank Hesitation
According to an ET report, the discussions are very fluid and since SoftBank’s Vision fund is registered in Saint Helier, Jersey, the company has to keep in mind the hefty tax liability on its exit as there is no double taxation avoidance agreement (DTAA) protection in Jersey.
SoftBank may hold the Flipkart stake for 6-12 months with a view to avoid the short-term taxation problem, the report added. (Read more at inc42.com)
But Wait, There Is More To This
In its fairly written article, BloomberQuint has an opinion!
BQ says, Our Bansal Boys sweated under the dreaded midnight knock, ceding control with every chunk of equity that was sold to the foreigners. Ultimately, they raised $6 billion but sold their dream for only 3.5 times that capital infusion, for a mere $21 billion.
Now, look at what their American and Chinese peers pulled off. Jeff, Mark, Jack, and Pony are each running half a trillion dollars plus of market value today; ironically, their individual shareholding is about equal to what the Bansal Boys owned in Flipkart!
So here’s the tragedy:
- While the Indian government has virtually forced the Bansal Boys to sell their dream for a relatively paltry $ 21 billion, the American/Chinese governments have abetted Jeff/Mark/Jack/Pony to continue controlling their ambitions, in hot pursuit of a trillion dollars of value in each of their companies.
- $21 billion may sound like a lot of cash to idea-starved, small-thinking Indians, but frankly, it is trivial for global capital. As Indians, we are often happy with what we’ve achieved, never exercised about what we could have done.
- To compound our stupidity, we are applauding and celebrating how cheap we’ve sold 40 percent of our e-commerce market to the Americans, besides killing the aspirations of our brightest entrepreneurs!
BBC has a very strong conclusion,
What does the rest of India's e-commerce market look like?
- It says, The Indian e-commerce market, beyond retail, has more than a dozen major Indian as well as foreign players and brands. Most of the market leaders have foreign funding - from Softbank, Alibaba, Naspers etc.
- In the taxi aggregation market, the Indian start-up Ola competes fiercely with Uber although both have a common shareholder, Softbank.
- Alibaba and Softbank-funded Paytm, which dominates the busy mobile payments market, now faces competition from Google, Facebook and Paypal.
- The online travel market is dominated by two Indian players, MakeMyTrip, which is funded by Naspers Ltd and the Chinese travel operator Ctrip, and the government-owned IRCTC, which sells railway tickets.
It is a small effort by us to bring the full information at one place. Please comment if you like the information. (BackSpaceGuy)
References:
- bbc.com
- economictimes.indiatimes.com
- bloomberguint.com
- inc42.com
- Image Source/Courtesy : smedia2.intoday.in
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