Ever since the announcement of this merger of Wal-Mart Stores and India’s largest e-retailing portalsite, Flipkart, a lot of confusion has been generated among the shareholders. Having quite a few possible winners and losers in sight, many are asking which direction to take and what will be the influence on the market. Some consider that both will survive the merger, others expect a complete merger of both businesses and many others predict the economy will face a decrease. This article attempts to explain this issue.
Some specialists suggest that the merger is too good an opportunity for a few of the retail giants to pass up. To benefit from this new found opportunity, they may enter the Indian market and hence lead to the economic growth. Though at first glance it may seem strange to see two big names from two different countries merging to create a strong company, the reasons supporting the businesses is very clear. Both Flipkart and Walmart have serious issues with their business model, which makes it impossible for them to compete with their existing business models.
Wal-Mart and Flipkart
The difference between the growing speed of technology along with the slowing down of the US economy is growing since the amount of internet shoppers keeps growing. Having a bad market and expanding customer base, a business based on both digital and physical shops may do well in India. To counter the current situation, the combined company is going to need to invest heavily on its own retail operations so as to continue to control the international supply chain.
Walmart and Flipkart have been dominating the e-commerce marketplace for the last few decades now. They provide a powerful platform for internet trade and are thus the obvious choice for both sellers and customers. Walmart has a solid market presence in a nation which is accustomed to purchasing goods. While Flipkart doesn’t have the same presence and numerous new players have entered the Indian market, not one of them can compete with Wal-Mart and Flipkart, who have a very strong client base.
That is 1 reason why the present and new entrants cannot fit Wal-Mart and Flipkart. Although the rivalry might not be so stiff, it is still an extremely hard market. The simple fact that Wal-Mart is a conventional business while Flipkart is that a startup does not assist either of the newest players in such a scenario. Though Flipkart has some excellent qualities, there is no doubt that the Walmart brand name will remain the leader in the future.
Given the standing of Walmart and Flipkart
Given the standing of Walmart and Flipkart, there are two clear directions for the near future of e-commerce players from India. The first one is for Wal-Mart to split into two parts and market its retail stores in India. Both Walmart and Flipkart operate through their own business units, which could bring them under one roof. What is important is their retail companies are operating at high margins and, with a good business model, the two businesses may live on their various profits for quite a long moment.
If both companies fail to cooperate, it would be possible for both to lose their distinctiveness. Both are presently valued quite highly by their clients and they need one another to continue their market dominance. Should the new company fail to prosper, there’s a real probability that both Wal-Mart and Flipkart would be merged into a single company and so would become more unified.
To prevent such a scenario, Wal-Mart and Flipkart should be united to conduct their operations in India and focus on expanding their various online businesses. Although the final result won’t be a clean sweep, both businesses could outdo each other concerning profitability and offer far better value to their clients. In such a scenario, it’s expected that the prices of all their products will be lowered as they’ll be competing with similar products from the other company.
The next solution for the future of Wal-Mart and Flipkart will be to allow them to market their share to a third party, which can provide the funds required to expand their e-commerce player. As Wal-Mart and Flipkart have a strong community presence, selling their own shares to a third party would help to maximize their presence and manufacturer name. Brand visibility in the Indian market.
In a situation like this, the corporation is going to be much more competitive than it now is and will have the ability to provide its customers with a high quality product. At a lower cost. By operating under another brand, it will have the ability to provide better discounts on its clients.