Economy

Walmart buying Flipkart is dumb for its shareholders

Before Flipkart came to India, I was buying technical books from Amazon.com and having them shipped to India by paying ridiculous amounts for shipping. I am unashamed to say I am addicted to Amazon for well over two decades now.

Then as soon as Flipkart started, I started buying from them – in those days they sold only books, yet their customer service was exceptional and was unheard of in India before them and they rocked. The growth they have achieved now was set in stone in those early days.

But as soon as Amazon India opened in India, I switched from Flipkart and getting a Prime subscription sealed the move for me. In between, I flirted when Flipkart introduced their own membership plans, it became clear being a member with Flipkart didn’t offer any value at all, and very soon they killed the program, along with their Digital Music service which I loved.

Reading the news this week, that Walmart is buying Flipkart, this is what I feel.

Call me an old-fashioned entrepreneur, but I fail to see the wisdom of this deal for Walmart investors. As a consumer, I am loving this deal.

For a cash of $19 Billion, the world’s largest retailer could’ve done wonders in India – for the supply chain/infrastructure/cold storage here and made quicker returns. Flipkart is losing money faster than they can get the currencies delivered from their investor’s warehouses. Flipkart is depended on only one category (Mobile Phones) which has one of the lowest gross margins. As a consumer, I see Amazon has beaten them for good on categories like Books, Home Improvement, Cosmetics and more. I love Amazon Prime and Amazon Music – there are no such offerings from Flipkart. And Prime’s free shipping is what I look for every single time I buy something online. Owning Myntra & Jabong makes Flipkart better in only one category Fashion, which personally I have my doubts about.

Courtesy: Livemint.com

This deal is a miracle that has happened for the “early” investors of Flipkart who were burning money by the minute. They have proved to the toughest negotiators in the world and luckier too. 


Also published on Medium.

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