India: kicking off the Indian Big Players global e-commerce game

The most important corporate acquisition ever carried out in India and the More onerous purchase of an e-commerce company worldwide: it is with this premise that we frame the colossal operation carried out by Walmart towards Flipkart (India's undisputed leader in the sector, with a value that stands at around 2.5 billion euros) that opens up new business scenarios in the Subcontinent and testifies to how India's role, from an economic and geopolitical standpoint, is destined to weigh ever more heavily in the years to come in the global chessboard.

The Big Players of E-commerce in India

The U.S.-based Walmart, the world's largest chain in the retail sector, thanks to a investment of nearly 13.6 billion euros has secured the 77% of Flipkart's shares, managing to Burning off competition from Amazon: and it is precisely with a view to blocking the expansion of Bezos's company in India (as well as to recover ground from the failed project with Bharti Enterprises) that an important key can be found in this impressive operation, for which Walmart itself has immediately made available an additional investment of 1.7 billion euros.

It is not difficult to understand Walmart's motives. In India, the online retail sector is the huge new business frontier: according to a recent report conducted by Morgan Stanley, the industry's turnover, which in 2016 was close to 13 billion, will grow exponentially reaching the extraordinary figure of 170 billion euros by 2026 (in Italy, just for comparison, the e-commerce market reached 23.6 billion euros in 2017). The potential is explosive when one considers that in India the penetration rate of e-commerce among the population is still low and that the increase that is taking place is unprecedented: in the Subcontinent only one third of the population uses the Internet (450 million people out of 1.33 billion inhabitants) and every month there are 6 million new e-commerce customers.

Today, e-commerce still accounts for a small share of the entire local retail market (whose turnover is estimated at around 551 billion euros), but the boom is only just beginning, due to a number of contingent considerations: the precarious condition of the Indian infrastructure favors the development of e-commerce, as today's Indian consumer prefers to buy their products at the click of a button instead of spending hours in traffic in Delhi, Mumbai or Bangalore.

The acquisition of Flipkart will thus have the effect of further accelerating not only the development of the online retail but also to related segments (electronics, apparel, furniture, beauty and personal care products, among others). It is likely, therefore, that a particularly fierce struggle may soon take place in India among the global bigwigs in the sector to secure the largest market shares, but it must also be considered that it is not possible to predict what the future prospects, the evolution of the sector and the related economic fallout in the Subcontinent will be, especially considering that currently none of the big players present are grinding out profits.

So are we facing an industry that is rewriting its own rules in the chaotic Indian market, or is this just the makings of a colossal failure?

To read the article published by ISPI click here.

ALSO READ:

Will India replace China in international trade?

The success of Italian companies in India

L’India bans the’use of single-use plastics: what changes for exporting companies