E-Commerce

What happens when India’s Largest E-commerce Platform goes public

Flipkart delivery box

Flipkart, the largest e-commerce platform in India is planning to public in a couple of years as reported by the Economic Times. CEO Kalyan Krishnamurthy announced the news recently. This marks a major shift in the e-commerce scenario of India. It will be interesting to the American retail giant, Walmart’s stance on the matter. According to the reports, Walmart might as well, partly or completely, withdraw from the Indian E-commerce giant while it goes public in the US. Currently, Flipkart’s 77% controlling stakes are owned by Walmart which was sold for a whopping $16 billion last year.

The Business Standard reported that the during the deal between Walmart and Flipkart, it was decided that the American retailer will support the ambition of the Indian giant to go public in the future if the group of minority shareholders ask for it. Flipkart would become a majority-owned publicly-invested subsidiary of Walmart. It should be noted that the acquisition of Flipkart was crucial for its growth in the global retail sector and also to beat the online retail behemoth Amazon in the e-commerce game.

According to the reports, the clause of the deal between Walmart and Flipkart mentions that Walmart has the right to invest around $3 billion more in Flipkart and that too at the same valuation. This implies that the shareholding of Walmart in Flipkart would cross 85% mark. The impact of this situation would be the revoking of some of the major rights of the minority shareholders such as Tencent, Tiger Global, Microsoft, Binny Bansal and so on.

Interestingly, the company that is in line to invest a huge amount in Wlamart-owned Flipkart is Alphabet, the parent company of the internet behemoth Google. This is a strategic investment as it seems from the outset. The reasons behind the investments are:

  1. Flipkart will get the technology advantage over Amazon with Google’s help
  2. Google will get a strong hold on the global retail and e-commerce sector
  3. Google Pay and Flipkart’s PhonePe can work together to dig deeper in digital payments ecosystem
  4. Google’s hardware such as the popular Pixel series and its Home series of products will get a good platform especially in India to sell.

Digital Payments have seen a massive growth in India in the past 2 years especially after the demonetization move by the current government in 2016. This opens up a huge market for the technology companies across the world to try out the new business and taste success. Google have been quite successful in India with its Google Tez that later changed its name to Google Pay and is now available worldwide. However, Flipkart is also a huge player in the Indian market after the likes of Paytm and Indian Government’s very own BHIM app. So it is in Google’s interest to join hands with the Indian giant and grow above the competitors in India.

Flipkart’s IPO and that too in the US stock market can prove to be a huge boost to the Indian startup ecosystem as a whole. It will also act as an inspiration for the Indian tech based startups to perform well and go international in the near future.

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