Flipkart-Walmart deal: Here's how offline retail firms could benefit

Walmart store. Credit Diego M. Radzinschi ALM

A day after adding Flipkart to its shopping cart at a fancy price tag, McMillon told Flipkart staffers that the deal was among the best decisions and emphasised that India was the best place was to be in.

The third major party in the e-commerce battle in India is Paytm, and now, their official reaction has come in.

E-commerce firm Flipkart has sought to assure its 150,000 sellers of operational continuity, amid fears of Walmart's private labels hogging digital shelf space as a result of the U.S. retailer's recent investment deal. It is Walmart's biggest deal ever, easily surpassing the US$10.8-billion it paid for Asda almost two decades ago. Online and offline are coming together, and there are many things to come.

"Treaty provisions will not apply on indirect transfers that have Indian assets as underlying", said another official, referring to double taxation avoidance agreements, in this case, the one between India and Singapore.

That share will decline further after Walmart's decision to merge its Asda business in the United Kingdom with Sainsbury Plc, retreating from a market that was once its shining star overseas. He's certainly mindful of past missteps overseas, such as his 2011 decision to buy an unprofitable, second-tier online marketplace in China that's forced the company to play catch-up to Alibaba, the Amazon of China, ever since. So, the immediate drag on the Walmart numbers as a result of the Flipkart deal could translate into a little over 9 per cent if the negative impact of 30 cents per share is taken into account. It first attempted to enter India's brick-and-mortar retail with an alliance with the Bharti group in 2007. Walmart will just supply better logistics, scale, and capital to support their venture.

The JV envisaged opening B2C stores, regulations permitting. More than 3,000 employees of Flipkart and its fashion arms Myntra and Jabong, and its payments arm PhonePe had participated in that repurchase exercise. With deep pockets and years of expertise in retail grocery, Walmart's big bang-entry may deliver a knockout punch to some offline retailers or force consolidation.

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Besides, "it is much more hard for the government to control and regulate foreign owned platforms particularly in e-commerce sector which has no boundaries", Khandelwal said.

In 2017, eBay sold its India business to Flipkart and purchased a minority stake in the e-commerce company.

Earlier, when talks were on between Fiipkart and Walmart regarding this acquisition, Paytm founder Sharma had expressed that this was good for the overall startup ecosystem in India.

Some domestic retailers have also received a valuation boost from the Walmart deal.

On the other hand, big Indian comglomerates, such as Future Group, Aditya Birla Group, Tata Group and Reliance Industries, are already present in the space.

The income tax department has sought details of the deal that Walmart announced on Wednesday.

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