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Flipkart and Its Acquisition by Walmart: Case Study

Flipkart was struggling financially and losing market share to Amazon in India. With pressure from major investor Tiger Global, Flipkart brought on a new CEO in 2017 who refocused the company on mobile phone and fashion sales. This helped Flipkart gain leadership in these areas and attracted a $2.5 billion investment from Softbank. In 2018, Walmart acquired Flipkart for $16 billion, seeking to gain a leading position in India's growing e-commerce market, especially in high-margin categories like fashion. The deal will have implications for traditional retailers in India and marks a shift to strategic corporate players dominating the country's online retail space.

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377 views

Flipkart and Its Acquisition by Walmart: Case Study

Flipkart was struggling financially and losing market share to Amazon in India. With pressure from major investor Tiger Global, Flipkart brought on a new CEO in 2017 who refocused the company on mobile phone and fashion sales. This helped Flipkart gain leadership in these areas and attracted a $2.5 billion investment from Softbank. In 2018, Walmart acquired Flipkart for $16 billion, seeking to gain a leading position in India's growing e-commerce market, especially in high-margin categories like fashion. The deal will have implications for traditional retailers in India and marks a shift to strategic corporate players dominating the country's online retail space.

Uploaded by

Nila Dax
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Case Study

FLIPKART AND ITS


ACQUISITION BY WALMART
INTRODUCTION

• Two years back Flipkart was making huge losses


• Meanwhile it’s arch rival Amazon was gaining market share in
India.
• Tiger Global, a New York City-based hedge fund that had bet big on
Flipkart and was worried about its Indian investments.
• In 2017, Kalyan Krishnamurthy who had previously worked as a
director at Tiger Global, replaced Sachin and Binny Bansal as the
CEO of the company.
• The taps on discounts were opened; the focus on mobile phone
sales was sharpened.
• Seeing this, Softbank Vision Fund invests $2.5 billion.
E-COMMERCE 101

• The four broad verticals(Electronics, Fashion, Household stuff, FMCG)


• Regulations and barriers
• the cost of customer acquisition
• In e-commerce, GSV levers and profitability levers are separate from each
other.
• Demand outside of the cities.
• Local market price competition.
HOW DOES FLIPKART COMPARE TO AMAZON IN INDIA?

• Reports suggest that Flipkart leads in GSV over Amazon, while Amazon leads
in units sold. Amazon is also believed to have overtaken Flipkart in metros
(where the most purchasing power lies).
• Flipkart leads in the fashion vertical.
• Amazon also seems to lead from a consumer share perspective.
SO WHAT DOES FLIPKART BRING TO THE TABLE FOR
WALMART?
• Gaining leadership in the fashion vertical.
• Fashion prices are not easy to compare across websites.

• Fashion is a goldmine from a P&L perspective, if it is done right. If not done right, though,
major costs kick in.
• Flipkart’s lead in the mobile market also has significant implications.
• However, is that mobile phones are a double-edged sword.
• Once the Flipkart deal goes through, Walmart will inherit a business that is a leader in both
high-margin business (fashion) and high-GSV business (phones).
• Did Walmart Overpay?
• $16 billion over-valuation?
• Did Walmart have a choice?
• Could have chosen Amazon’s path and set-up their own e-commerce business.
• Smart moves for Walmart?
• Better bargaining power with suppliers.
IMPLICATIONS FOR INDIAN RETAIL

• Slow erosion of sales towards e-commerce.


• Both small retailers and big players like Future Retail (Big Bazaar) should be wary.
• Presence of strategic players and not VC driven start-ups.
• India’s regulatory direction
THE TAKEAWAY FROM THIS DEAL

• Deep pockets win


• Relentless focus on killing competition
• Flipkart would have been in the news for very different reasons had it not been for the timely
fund infusion by SoftBank in 2017 thanks to Lee Fixel and Kalyan Krishnamurthy of TIGER
GLOBAL.
WHERE WILL ALL THE MONEY GO?

• Most of the money will move from Walmart to Tiger Global, SoftBank Vision Fund and Accel,
which have invested heavily in Flipkart during the past two years.
• Flipkart’s Indian founders and employees will end up with a small slice (around 10%)
THANK YOU

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