Merger & Acquisition in the business world is not a new thing, it has happened before on

multiple occasions, yet it is one of the most complex and expensive deals done between two
or more firms. The main reason for the complexity is synergy between firms is hard to create
and maintain. Merger & Acquisition in general terms refers to coming together of companies
or assets.

Indian E-Commerce Industry

E-commerce is the activity of buying or selling products over the internet. The e-commerce
industry has shown us the efficiency that comes with a properly integrated value chain. This
power delivers value for customers and suppliers, and at the same time, it also creates an
entire ecosystem of supporting industries that grow at the same rate as the phenomena itself.

The most prominent E-commerce firm in India, Flipkart has been a loss-making company
since its inception in 2007 by Sachin Bansal and Binny Bansal. The revenue for Flipkart in
2017 was almost 200 billion INR the most for any Indian E-commerce start-up. Amazon is
the world’s most significant E-commerce player, and it has competed with the Flipkart ever
since it came to India some years ago. Their tussle has led to an almost demise of Snapdeal,
once a prominent player in Indian E-commerce market. This competition has made both the
firms to lower their prices to increase their sales and customer acquisition.

The deal is expected to help generate Jobs in India and will also bring in more offers for the
customers as Walmart has said it is going to target sales over Profitability at the initial stage.

The reason why Walmart brought Flipkart

 Flipkart acquisition allows Walmart to benefit from a sizeable Indian e-commerce

market, where growth rates are likely to be about 36% CAGR over the next five years.
 Flipkart’s subsidiaries such as in-house payments business (PhonePe), apparels
business (Myntra and Jabong) and logistics operations (E-Kart) are assets, which can be
utilized to improve earnings and growth.
 Walmart may use its expertise in the food segment to develop supply chain and
infrastructure to capture the market in this segment.
Possible outcomes of this deal

 Intense competition in retail and e-commerce space can be expected shortly, which
will increase discounting pressures on the retailers and e-commerce players, as Flipkart
 is expected to use its fund in discount offerings to drive sales growth while competing
against Amazon.
 Offline players such as Dmart and Future group may be forced to adapt their
business models to compete with online giants.
 Consolidation in markets may appear, we may see both offline and online players
coming together in the future.
 This deal may also give startups false hope of being Walmarted, so they may focus
more on increasing client base and driving sales instead of finding a proper model to
breakeven and attain profits.
 Smaller players in the Indian E-commerce sector would be either wiped out, or they
would have to adapt themselves to enter niche segments to compete with these giants.