Post Walmart deal, eBay to exit Flipkart

Flipkart’s group CEO Binny Bansal who will also take on the role of chairman after Sachin Bansal’s exit and CEO Kalyan Krishnamurthy are expected to remain at Flipkart after the deal goes through

The deal, announced in a joint statement, values Flipkart, India's largest e-tailer on the basis of sales, at just over $20 billion.

"The deal indicates attractiveness of India's consumption market for global majors".

USA supermarket chain Walmart is making a major play for India's e-commerce market, dishing up USD$16bn (£11.82bm) for a 77% stake in local player Flipkart.

Walmart's deal to buy a controlling stake in India's biggest online seller is meeting skepticism on Wall Street. Notably, Walmart is going ahead with this in spite of the reported efforts of Amazon to interrupt this deal. Flipkart has 34 per cent market share while Amazon controls 27 per cent of Indias online sales. Walmarts Krish Iyer will be the CEO of the Bengaluru-based firm.

Today, Indian e-commerce industry is already close to United States dollars 30 billion in size and analysts expect this to zoom to USD 200 billion by 2026.The growth of the sector was comfortably in sync with the meteoric rise of Flipkart.From a modest two-bedroom apartment in Koramangala, the Bengaluru-headquartered company now has multiple offices across the country.

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Last year, Kalyan Krishnamurthy, previously an executive in Flipkart investor Tiger Global, took over as Flipkart CEO. On the other hand, co-founder Sachin Bansal sold all his stake to Walmart for $1 billion as he left the company.

"Though the focus will be on serving customers and growing the business, Walmart supports Flipkart's ambition to transition into a publicly-listed, majority-owned subsidiary in the future", the statement said.

As far as the Walmart-Flipkart deal is concerned, it is clearly a big deal for Flipkart and its founders.

According to Forrester Data, the Indian online retail market is around $20 billion in 2017 (2.4% of total retail market in India), which is still relatively small when compared to the penetration rates of other mature markets. This is partly because although the Internet and Mobile Association of India estimates that there are approximately 481 million internet users in India, the number of individuals with enough disposable income to shop online is still relatively small. Previously, Walmart had ended up violating Indian laws concerning foreign ownership in this sector of retail and had also seen a failed joint initiative in 2013.

Walmart, whose profits have already been pinched by efforts to build up its e-commerce in the United States, notably grocery delivery and pickup, has already tested investor patience for the past few years with its tech investments. There was little doubt that this was a hail Mary pass for Walmart in India - it needed to find a growth engine and tapping into the world's fastest growing middle class is as good as it gets. "Walmart is the ideal partner for the next phase of our journey", Bansal said. Flipkart was founded by IIT Delhi graduates Sachin Bansal and Binny Bansal - the two are not related - as an online bookstore in 2007.

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