Walmart is in and Sachin Bansal is out. For Walmart, the entry costs $16 billion. For Sachin, the exit fetches more than $1 billion. And, who is the winner? The question will have to wait for a long while for an answer. Nevertheless, it will be interesting to travel back in time. Surely, the irony of the Flipkart-Walmart deal will not be lost on long-term observers of this Indian e-commerce firm.
“I think what we need to do is what at some level China did: [tell foreign players that] we need your capital, but we don’t need your companies,” Flipkart’s then chairman Sachin Bansal told participants at a panel discussion at Carnegie India’s Global Technology Summit in Bengaluru in December 2016.
‘Why depend on U.S.?’
“We are making a mistake by not thinking of Internet and technology as a strategic sector and depending too much on China and the U.S. to build that for us... we have the capability, and we have the know-how to do this in India ourselves for our markets,” he went on to add. Much water has flowed since then. Well, Walmart is just setting foot in India in a big way. Of course, with its money. Mr. Bansal, who declared that he wasn’t afraid of “Amazon or Alibaba”, is out of Flipkart, a company he co-founded with Binny Bansal several summers ago.
One could discuss the reasons for his exit till the cows come home. Yet, his views at that point of time could not be dismissed as just that of an individual. What he said then as a co-founder was viewed as a reflection of the thought process within Flipkart, a ‘Swadeshi’ firm fighting multinationals such as Amazon. A year after this speech, Mr. Bansal brought together like-minded people to form Indiatech.org, a lobby group against deep-pocketed foreign rivals. After all that comes the mega Walmart deal!
What does one make of all this? When competition became intense, Flipkart’s leadership found it convenient to let its chairman make a vociferous, protectionist pitch. But later when the opportunity presented itself, the shareholders just cashed in. Somewhere along the way, this e-commerce firm has diluted its Indianness with the induction of foreign holding. What Mr. Bansal had articulated in the Carnegie summit is largely irrelevant for Flipkart now.
And, the question is: a Walmart in Flipkart — is it good or bad for building a healthy ecosystem in the still-evolving Indian e-commerce space?
Walmart’s foray into Indian e-commerce space may change the fortunes of swadeshi players in the online retail space such as ShopClues, Snapdeal, BigBasket and Paytm. Will they have the staying power — financially and strategy-wise — to blunt the Walmart onslaught? Perhaps, this will see a round of consolidation in the online retail space with biggies such as Amazon and Alibaba stepping up their investment either directly or through acquisitions. Surely, there will be lot more action on the ground in the coming days in the online sphere. The Walmart-Flipkart deal may also bring about a huge churn in the offline retail space, dominated by formidable names such as the Mukesh Ambani-led Reliance Retail, Future Group and D-Mart.
Will Flipkart-Walmart mark the end of a dream for a swadeshi e-tailer? Or, will it reignite the swadeshi fire among the Indian biggies? Will it end the capital dumping debate or will it revive it? Only time can tell.
