The largest corporate acquisition never made in India and the more expensive purchase of an e-commerce company worldwide: it is with this premise that the colossal operation carried out by Walmart towards Flipkart (undisputed leader of the sector in India, with a value of around 2.5 billion euros) which opens up new business scenarios in the Subcontinent and demonstrates how India's role, from an economic and geopolitical point of view, is destined to weigh more and more in the years to come on the global chessboard.
The American Walmart, the largest chain in the world in the GDO sector, thanks to a investment of almost 13.6 billion euros she secured the 77% of the shares of Flipkart, managing to burn the competition from Amazon: and it is precisely with a view to blocking the expansion of Bezos' company in India (as well as recovering ground from the failed project with Bharti Enterprises) that we can find an important key to understanding this impressive operation, for which the Walmart itself immediately made available a further investment of 1.7 billion euros.
It's not hard to understand Walmart's reasons. In India, the online retail sector represents the huge new business frontier: according to a recent report conducted by Morgan Stanley, the turnover of the sector, which in 2016 was close to 13 billion euros, will grow exponentially reaching the extraordinary figure of 170 billion euros by 2026 (in Italy, just to make a comparison, the e-commerce market reached 23.6 billion euros in 2017). The potential is explosive if one considers that in India the penetration rate of e-commerce among the population is still low and that the increase that is being recorded is unprecedented: in the Subcontinent only a third of the population uses the internet (450 million of people out of 1.33 billion inhabitants) e there are 6 million new e-commerce customers every month.
Today e-commerce still represents a small share of the entire 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 the Indian infrastructure favors the development of e-commerce, as today's Indian consumer prefers to buy their products with a simple click instead of spending hours in the traffic of Delhi, Mumbai or Bangalore.
The acquisition of Flipkart will therefore have the effect of further accelerating not only the development of online retail but also to the sectors connected to it (electronics, clothing, furniture, beauty and personal care products, among others). It is therefore probable that a particularly close fight between the world's big names in the sector could soon take place in India to secure the largest market shares, but it must also be considered that it is not possible to predict what the future prospects will be, the evolution of the sector and the related economic fallout in the Subcontinent, especially considering that currently none of the big players present is grinding profits.
Are we therefore facing a sector that is rewriting its rules in the chaotic Indian market or are these just the premises for a colossal failure?
To read the article published by ISPI click here.
READ ALSO:
Will India replace China in international trade?
The success of Italian companies in India
India bans the use of single-use plastic: what changes for exporting companies
Are you interested in our service?
Fill out the form or contact us at the number
+39 059 9770184
