Indian E-commerce Market Booming

  • Experienced international players are taking interest in Indian companies due to the Government of India's favorable policies and regulatory frameworks.
  • Walmart plans to launch a new video streaming service from its Flipkart subsidiary in India as part of its battle with Amazon.
  • The Indian e-commerce industry has been on an upward growth trajectory and is expected to surpass the US to become the second largest e-commerce market in the world.

The e-commerce has transformed the way business is done in India. Ecommerce is India’s fastest growing and most exciting channel for commercial transactions. With increased   use of smart phones, tablets and internet, ecommerce has become widely accessible to both urban and rural users.

Flipkart Internet Private Limited is an e-commerce company based in Bengaluru, India. The Company is acquired by US retailing Giant Walmart, in a deal worth $16 billion in 2018.

Foreign companies are investing huge sums of money into Indian companies. Experienced international players are taking interest in Indian companies. The Government of India’s policies and regulatory frameworks such as 100 per cent foreign direct investment (FDI) in B2B e-commerce and 100 per cent FDI under automatic route under the market place model of B2C e-commerce are expected to further propel growth in the sectors.

Current scenario

Flipkart Internet Private Limited is an e-commerce company based in Bengaluru, India. The Company is acquired by US retailing Giant Walmart, in a deal worth $16 billion in 2018. The Walmart-Flipkart deal was announced in May 2018 and completed in august 2018 after a fair amount of back and forth between government departments and the companies. Walmart paid $14 billion to buy a 77% stake from the existing investors of Flipkart and put in $2 billion as fresh investment in the transaction. After getting acquired by Walmart for $16 billion, Flipkart is expected to launch more offline retail stores in India to promote private labels in segments such as fashion and electronics.

Walmart International Holdings Inc. business model and activities in India were different from that of flipkart’s. Also, because of FDA restrictions Walmart India cannot engage in selling directly to consumers.

According to a report by Goldstein Research, the combined market share of Flipkart and Walmart in the market of B2B sales are less than five per cent and the incremental change in the market shares as a result of this transaction is less than 0.5 per cent. Walmart U.S. company is now rolling out a plan to more than double its wholesale chain in India over the next four years.

Walmart’s biggest competition comes from Ambani, who isn’t subject to the restrictions on foreign companies and already controls India’s largest brick and mortar retail chain, as well as a network of wholesale stores that is twice the size of Walmart’s.  Walmart plans to launch a new video streaming service from its Flipkart subsidiary in India as part of its battle with Amazon. The service will reportedly be free for members of the Flipkart Plus loyalty program.

Walmart’s biggest competition comes from Ambani, who isn’t subject to the restrictions on foreign companies and already controls India’s largest brick and mortar retail chain, as well as a network of wholesale stores that is twice the size of Walmart’s.

The Government of India has announced various initiatives namely, Digital India, Make in India, Start-up India, Skill India and Innovation Fund. The timely and effective implementation of such programs will likely support the e-commerce growth in the country.

The e-commerce industry been directly impacting the micro, small & medium enterprises (MSME) in India by providing means of financing, technology and training and has a favourable cascading effect on other industries as well. The Indian e-commerce industry has been on an upward growth trajectory and is expected to surpass the US to become the second largest e-commerce market in the world.

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Steve Blade

At Goldstein Research, we create adaptive and effective business solutions that help our clients escalate their growth and give them an edge over their competitors in the global market.

https://www.goldsteinresearch.com/

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