Opening remarks to the book of startup scenarios in India can be succinct with a headline, “Walmart completes its $16 billion acquisition of Flipkart” or the facts can be ferreted out to know whether it is really a matter of celebration for Indians or euphoria for investors who were constantly losing money since Flipkart’s launch in 2007. Testimonies all over the media about Flipkart’s acquisition has sent strong signals around world. It showcased the potential of world’s fastest growing economy to nurture home grown startups. India is in the 100th position in terms of doing business and 37th position on the global startup ecosystem chart. This further embellishes India as a nation of budding startup entrepreneurs.
Before we Indians start swooning to this news of the single largest transaction in the history of e-commerce sector in the world, with a valuation of $20.8 billion of our most valued startup; we should introspect Walmart’s gambit with rapt attention. The retail giant from Arkansas who is famed for killing small businesses is not prowling on Indian market for the first time in 2018. Constricted by India’s FDI policy, Walmart couldn’t open its standalone stores in India in its early days. It had to piggyback on Bharti enterprises to embark on its India journey back in 2007 after which its first store came up at Amritsar in 2009.
But the dialect of retail has changed over the years. Even Walmart can’t dismiss the fact that with the changing semiotic in retail over time; the ball was no more on their court. It was then that they started acquiring e-commerce startups to add tech weapons in their arsenal. To resuscitate its global ambitions, vouching for Flipkart was the obvious move at a time when Indian e-commerce industry is expected to cross $100 billion mark by 2020. But, duopoly of two American giants on Indian market space to snatch the Numero Uno position is the last thing small Indian businesses would love to have on their platter.
Small businesses always had this apprehension that Walmart will mop the floor with them with its predatory pricing. Confederation Of All India Traders (CAIT), representing over 70 million traders filed an anti-trust petition with the Competition commission Of India (CCI) over this deal. Although, it apparently didn’t gather enough steam to stop the American behemoth from acquiring 77% stake in our beloved unicorn startup. Now that the American behemoths have locked horns on a battlefield whose retail market is seen to be growing at leap and bounds; there is respite awaiting for shoppers as deep discounts will continue to entice both new and existing shoppers. But the other side will not be greener as small traders will be jittery about hyper-competitive prices which will cannibalise the market and make it tougher for smaller players to operate.
It is peremptory to mention that, with the advent of two retail giants, there are apparently bleak chances for a domestic retail champion to grow. The hindering factor is that anything which shows potential, will get acquired by either of these companies. But, the euphony of huge discounts and low prices by these foreign retail giants shouldn’t deviate our leery regulators from keeping an eagle’s eye on the flow of the retail game. Especially when there is a premonition that eventually Walmart is going to push its own levels and make indigenous vendors redundant; we hope that the playing field doesn’t get lopsided over the years…
-Biswa Pratim Kar || PGP MR
biswa.kar@northpointindia.com