19 July, 2018 / Internationalization

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

The Big Players of E-commerce in India

The most important corporate acquisition ever carried out in India and the more onerous purchase of an e-commerce company worldwide: this is the premise on which the colossal operation carried out by Walmart towards Flipkart (undisputed leader in the sector in India, with a value around 2.5 billion euros) which opens new business scenarios in the subcontinent and testifies to how India's role, from an economic and geopolitical point of view, is destined to weigh more and more in the coming years on the global stage.

The Big Players of E-commerce in India

The American company Walmart, the world's largest retailer in the mass retail sector, thanks to a investment of nearly 13.6 billion euros she has secured the 77% of Flipkart's shares, managing to Burning off competition from AmazonAnd it is precisely with the aim of blocking Bezos' company's expansion in India (as well as to regain ground from the failed project with Bharti Enterprises) that an important key to understanding this imposing operation can be found, for which Walmart itself immediately made an additional investment of 1.7 billion Euros available.

It's not difficult to understand Walmart's reasons. In India, the online retail sector represents the new huge business frontier: according to a recent report by Morgan Stanley, the sector's turnover, which in 2016 approached 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 considering that in India the e-commerce penetration rate among the population is still low and that the increase being recorded 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 represents a small share of the total local retail market (whose turnover is estimated at around 551 billion euros), but The boom is just beginning, by virtue of a series of contingent considerations: the precarious condition in which they find themselves India's infrastructure is driving the growth 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 therefore have the effect of further accelerating not only the development of the online retail but also to related sectors (electronics, apparel, furniture, beauty and personal care products, among others). It is therefore likely that a particularly fierce battle will soon take place in India among the global giants of the sector to secure the largest market shares, but we must also consider that it is impossible to predict what the future prospects, the evolution of the sector, and the related economic impacts on the subcontinent will be, especially given 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.