What consumers stand to gain from Flipkart-Walmart billion dollar deal
Walmart's $16-billion acquisition of Flipkart announced on Wednesday, May 9, could soon leave consumers spoilt for choice. With the deal bringing with it the possibility of varied options and better quality, the Indian consumer and the domestic retail market stand to be the biggest gainers.
Here's a lowdown on what we, as everyday consumers, will benefit from the billion-dollar agreement.
Better delivery, improved quality
While Flipkart could have been the first mover in the Indian e-commerce space, its operations often haven't been up to the mark.
There have been enough instances of product tampering and many a time, consumers have complained about receiving fake or damaged goods. Complaints about products of the wrong size or shape being delivered or the substandard quality of goods aren't unheard of.
As consumers, most of us invariably opt for Amazon, as it comes with the assurance of serving quality products. Against this backdrop, the best gift Walmart could give Flipkart is a robust retail operations network.
Walmart has been investing significantly in technology to be able to offer a seamless omni-channel experience to its consumers the world over.
Increased competition, stepped up consumption
A better managed retail operations network will not just increase the intensity of competition among Flipkart, Amazon and the likes of Reliance Retail and Future Group, but also step up consumption.
Walmart's USP has always been its private label merchandise, which it offers at highly competitive prices. This is true for not just the apparel segment, but also the grocery business.
As Walmart will support Flipkart with this efficiency, one is going to see the likes of Amazon and Reliance Retail leaving no stone unturned in responding to Walmart's moves.
Future Group is already following the Walmart model. Apart from announcing the ambitious strategy of integrating grocery stores with technology, the firm's chairman Kishore Biyani is busy carving out his fast-moving consumer goods (FMCG) empire, which is already a Rs 2,000 crore-business. He wants to become a Rs 20,000-crore entity by 2021.
Future Group's brands Tasty Treat, Desi Atta, Clean Mate and Kosh are already challenging the products of FMCG stalwarts such as HUL, Nestle and P&G.
E-tail push by private brands
Indian consumers, especially in smaller markets, still prefer to shop at brick-and-mortar stores and to reach out to them, both Walmart and Amazon definitely need nationwide physical presence.
As FDI in multi-brand retail is still a far-off possibility, the two global retail giants have to make do with e-commerce. However, Indian online consumers have plenty to look forward to, as they will soon be inundated with a plethora of shopping choices — across categories and at attractive prices. E-commerce, till date, had been all about deep discounting, but with the global biggies entering the fray, the action will now move to private brands on e-commerce platforms.