Walmart was forced to pay $15 Billion by Amazon, I think. Amazon-India is already a force to reckon with in India. They have a ton of customer love in India, and they are killing it. There is no reason for them to buy Flipkart. They did the required to hurt their competitor by feigning interest. Bezos is a master at deception. Well played, Bezos and Flipkart investors. Stingy Walmart has to cough up more money.
If Walmart pays a large amount, it is still advantageous to Amazon but does not look like that was the only ploy.
Amazon may have actually tried hard to prevent Walmart gain a foothold in online retail. Flipkart is reported as the largest or 2nd largest online retailer in India, to prevent that volume going to Walmart Amazon may have tried hard and pushed price in the process.
And I'd add that a high price hurts Walmart more than Amazon. Amazon's market cap is 3x Walmart's. Amazon has $31 billion in cash and short-term investments; Walmart has about $7 billion. On top of this, presumably Walmart will be investing heavily in expansion.
I think Walmart's stinginess is also an important point here. At this price, plus the additional money they put in, a good ROI gets harder. Bezos has never really cared about short-term ROI, but I wonder if Walmart will be inclined to be impatient or under-invest later because of the high price now.
That may be so, but now that it can afford it, Amazon has every intention of becoming a monopoly in the markets it enters. It's why they bought the #1 retailer in the Middle East, too:
People love Amazon now, but I think it's time to fear it. They're already in bed with governments for multi-billion contracts, and are aiming for monopoly power. They won't behave well for much longer, and I'd argue they've already started behaving badly (raising prices on consumers, lowering commissions on affiliates, and so on).
I work for Flipkart and I am quite happy that it's Walmart who we are going to work with instead of Amazon.
As an engineer, Walmart Labs (their research division in Bangalore) is a much better fit to Flipkart's culture than Amazon.
The engineering talent pool in Walmart Labs and Flipkart are quite similar. In Bangalore, there are a handful of companies like Google, Amazon, Walmart Labs, Flipkart, and LinkedIn who can really pay the big bucks necessary to hire the topmost talent from India.
Among these, Google has a laid back culture and does not really excel in retail. Amazon has a stressful culture and I know plenty of people who could not take the stress and long hours of working in Amazon beyond a year and moved to one of the other four companies.
Walmart Labs, on the other hand, is quite similar to us. I think there will be a good exchange of ideas and skills between the two companies.
By the way, since a lot of people are commenting here that Amazon is killing it and they are number 1. That's true. But that's not a very relevant metric. For the owners and employees of a company like Flipkart, it is not all about being number 1. It is more about being able to make substantial profit and pay the employees well enough to keep competing with the likes of Google, Amazon, and Walmart Labs in order to hire the topmost talent.
Granted Flipkart is not doing very well in making good profits right now but we are trying to make the areas where Amazon is weak at as our strengths. For example, Amazon at this time does not ship large products (things that are bigger than what you can hold in a hand) to small towns and villages. We are trying to excel in that and it has helped us survive so far. With us becoming teams with Walmart Labs, I am hoping we will do even better.
Regarding the last para, my experience had been the opposite. Whenever I enter my pincode in Flipkart, it would say we don't deliver to your area (which is a small town). Amazon and eBay didn't have any issues. All the items I tried to buy were no bigger than a home router. I contacted Flipkart 2-3 times about it over the last 3+ years. They just gave a generic response that we are trying to expand or something.
The title says Walmart beats Amazon in a battle. Then in the article it says:
"Flipkart’s board ultimately decided a deal with Walmart is more likely to win regulatory approval because Amazon is the No. 2 e-commerce operator in India behind Flipkart and its primary competitor. Amazon is out of the running unless Walmart hits unforeseen trouble."
It was a battle because Amazon went to the table to negotiate knowing they would not win. Their entire reason for entering the negotiations was to drive up the price for Walmart.
You don't have to win every battle to win the war.
I think it was a battle in the sense of "Amazon made Walmart pay a shitload and the Flipkart founders wanted the safest possible route to close because holy shit dat money"
Flipkart is losing to Amazon.in right now. I think that Softbank is smartly offloading a possible loser to Walmart/Google here at close to peak valuation. Maybe Google/Walmart can turn it around though.
This the wrong metric to look at. If you look at number of app reviews per week on Appannie, Flipkart averages roughly twice the number of reviews as Amazon with better average rating (4.6 vs 3.9). ~85% of India only accesses internet via mobile.
Alexa rank isn't a very accurate metric and I wouldn't give it much thought. I would focus more on the actual users they have on their ecosystem, demographic, frequency of ordering, etc.
Well, this does not give the correct picture on the ground. Flipkart is bigger than amazon here. They have fashion portal called https://myntra.com and new fintech play called PhonePe. They are biggest player in fashion and white goods including smartphones. And smartphones are huge in India. A big percentage (I don't know the split) of smartphones sold in India gets sold online and majority (50+%) on Flipkart.
Just using both sites (on desktop, and yes its a mobile first country) Amazon.in generally beats Flipkart on product selection, price, number of product reviews, and search results.
Can Flipkart succeed? maybe but 2 years from now if they didn't have this buyout I think they would have be a for sure in 2nd place. FK needed Walmart as much as Walmart thinks it needs FK.
What if Walmart and Google actually teamed up? Google technology powering Walmart's supply chain? I wonder how competitive they'd end up actually being vs Amazon.
What compelling tech does Google have that Walmart needs? Google has no sought after experience in retail or ecommerce. What would they give the largest retailer in the world? They are a half a trillion dollar company moving physical products. They already know how to do supply chain.
It looks like play to stop Amazon’s growth more than technology.
It would take Googlmart 5+ years to play catch up if not longer.
Google's too disorganized and they don't have any supply chain tech built up. Amazon has years of supply chain infrastructure (both software, physical systems and organization) including supply/demand forecasting models and warehouse operational investment (Kiva systems, etc...).
The only differentiation that Google adds to Walmart is:
- Top-talent engineering resources & brand which attracts talent to work on these problems
- Layers of developer tooling and services that remove the "systems at scale" development curve of startups and smaller companies.
Now if Alibaba teamed up with Walmart... (read: acquired).
Haven't they already? A few weeks ago I tried Google Express, and I really liked it, in general. I could get an order from CostCo, WalMart, Target, and others, over night for free if I ordered $35 or more. I ordered at noon on Friday and got the shipment by 10am Saturday.
This last week, Amazon announced they are increasing Prime to $120/year, and I started thinking about whether I needed Prime. For video, Amazon is barely usable these days IMHO. I'm mostly watching entertainment on Youtube, mostly how-to or edu-tainment stuff which Amazon doesn't have much of. Pretty much anything I reach out to watch, I have to buy from Amazon. Their music service has been useless to me too, I started with Google Play by uploading all my music, and could never get started with Amazon because it was too limited.
The most compelling thing about Amazon is it is one place i can go that has pretty much anything I'm looking for. Drawer slides, Sugru, specific DIY tools.
I gladly pay $15/mo for Google Play Family (music, no commercials on Youtube, for me and my family). But, $10/mo for Amazon is starting to feel questionable, when Google Express gives me a similar experience, without the pain of Amazon Pantry (filling a Pantry box), and Walmart will let me buy groceries online and then will bring them out to my wife's car on her way home (she works a block from the store that provides that service).
I think it's getting harder and harder for Amazon to justify the $120/year. Curious what other people are thinking.
There are actually a few possible synergizes, but less likely with their acquisition of JET.
Google's AI tech is superior than others in image and speech recognition as well as search. This mostly has to do with them literally buying all the AI talent.
Maybe a possible partnership with Waymo for level 4 driving tractor trailers.
Here is an avid Indian online buyer's point of view on this:
Flipkart was the favorite child of online commerce and had dominated the space in India in the first 5/6 years. I have been an active customer. They did bring on large deals, like Motorola Moto G and Xiaomi Mi phones launching exclusively in India through them.
But as with our modern connected world, competition is global. Amazon is a huge brand. Even in India the software developer world literally bets on AWS. Yes brand presence is a thing in marketing/sales psychology. Amazon started offerening faster deliveries and that I what, I think I remember, made me to switch initially.
Early days of Amazon in India were fairly low profile. The product catalog was poor. But if you keep a tab on global brands, you know Amazon is pretty much a predator in supply chain management. So they slowly built up their infrastructure. I still remember having debates a few years ago about which e-commerce player delivers to more PIN codes in India. Flipkart was still a winner a few years back, but that is now history.
I think Flipkart lost focus somewhere, got busy with I do not know what. Their deliveries did not get better. Amazon is a 900 pound Gorilla and very silently played their cards, got customer attention and sales. I easily remember how many Flipkart delivery boxes I used to see on the roads daily, which are now more in the Amazon brand these days.
Oh and one other thing: English is very common in India, at least in the urban consumer - so that makes us very aware of the US companies like Amazon (even Walmart) and when they enter India we do want to give them a try.
This deal is the result of commonly shared desperation. Both companies in the news Flipkart and Walmart are desperate to fight back Amazon's increasing market leadership and their spread. Amazon is growing crazy in India, literally.
But there's more to this. It's actually Walmart who is pushing this deal aggressively as they see it as a chance to tap into the increasingly growing Indian market. In past few years, Walmart did try numerous times to set up their shop here but due to certain FDI regulations they simply couldn't get in. Moreover, it is learned that Walmart (once the deal goes through) will be increasingly looking to expand Flipkart's nascent grocery related business. They want to overhaul the farm-to-customer supply chain and hence current stage of Flipkart and their logistics wing could be a real boon for Walmart. Walmart does have few retail stores in India but they are in JV with a telecom company owner Sunil Bharti Mittal.
On the other side, Flipkart badly needs capital infusion as they are bleeding or burning money at a crazy rate. Whatever edge they had currently in India over Amazon is due to Myntra's apparel sales. Flipkart, technologically speaking is lagging behind Amazon. And this is a real pain which almost all online retailers are facing. The same thing happened with another e-comm company SnapDeal (Also backed by Softbank).
One thing is for sure, to capture the Indian market and dominate it, either of these companies had to adapt quickly to cater to tier 2 and 3 cities of India. Whoever rules these cities and improve on last mile delivery experiences in these cities will rule Indian e-comm.
> This deal is the result of commonly shared desperation.
I get that Walmart is desperate to get into Indian market, but what's the issue with Flipkart. Even though they aren't doing as well as compared to Amazon, from the founder's pov, why would he care if the company goes to Walmart or amazon? After all, he gets the money, and he gets to make a exit(from what I've heard)
I don't know whether I should be sad or happy with this news. Flipkart has been the face of the Indian startup scene. So, it is sad to see it end like this.
But on the other hand they had tons of strategy related snafus like going mobile-only for sometime etc. So, this seems like a good thing to happen, at least Flipkart can't run out of money with Walmart behind it.
This will make sure the india e-commerce landscape remains competitive. Otherwise Flipkart would have run out of cash to bleed soon. As far as I know, both Flipkart and Amazon had been spending huge amount of money. I think this is very clever of Walmart, as they can make sure Amazon India keeps fighting for some time.
I think of this as one last gasp for Flipkart. After Amazon entered the Indian market and provided not only lower prices in many cases but also quick delivery and decent enough customer care. Whenever I compared Flipkart, Amazon and Paytm on price for certain products in the last few years, I've found Paytm to be the cheapest (after cash back), followed by Amazon and lastly by Flipkart. Amazon has caught up a bit on pricing while Paytm has realized that offering a lot of discounts and making losses is not that good of a business model.
India is a highly price sensitive market with almost no loyalty when it comes to online purchases where price comparison is quick(er) to do.
Amazon has a lot of money to tire out its competitors to death. While I don't like Amazon for a few different reasons, the writing was on the wall for quite sometime as far as Flipkart was concerned.
I'd guess many people would be leaving Flipkart in the next one year and either working for the competition or start a new company to compete with it.
Many here may not be aware of this but the tech landacape is quite different in India. Walmart actually has a major development center in Bangalore which attracts a lot of the top talent. No sane engineer in India who gets a job at any of Amazon,Flipkart,Walmart labs would even think of joining google india, a glorified testing centre
1 - google is going to participate in the purchase. Clearly a defensive move v amazon.
2 - us companies will now own the 1 & 2 positions for ecommerce in India. Start difference w China and somewhat surprising given Indias excellent engineering and biz culture
2 - does it have one? It seems that there is a colossal brain drain, and the quality of the engineers staying in India is tremendously diluted by those that pursued engineering purely as a safe career choice
Flipkart made a huge mistake by trying to go mobile-only a while ago and is now mostly a smartphone shop. Hardly anyone I know buys anything other than smartphones (often Flipkart-exclusive) from them. Amazon now has a bigger catalog and better prices too.
Walmart could come along and directly compete in the market by themselves. Wonder why this acquisition is needed at all. There's hardly anything defensible in Flipkart's assets, and this acquisition isn't at a deep discount.
I think antitrust regulations are a bit lax in India, to the extent that Amazon would even consider a bid for Flipkart, and the regulators and the government not opening their mouths about it.
Look at it from other angle: Amazon just made Walmart spent 15B, while imagine what Amazon can do with so much cash, considering their past performance. Is there anything they (as a company) failed ?
I thought Amazon was beating Flipkart, coupled with the Prime membership Flipkart would lose out eventually. Not sure Walmart is making the right investment here.
There are more speakers of Hindi than English in India, but they are geographically skewed toward the north of the country. Some regions (esp Tamil Nadu) are actively antagonistic toward Hindi. English is a good bet to be able to communicate across the entire country, and is also an official language.
English is the default language if you want to reach a maximum number of Indians. Hindi would probably be second, but why bother? Personally I like our migration to a common language. I feel that our different languages divide us.
[+] [-] throwaway6497|8 years ago|reply
[+] [-] seshagiric|8 years ago|reply
Amazon may have actually tried hard to prevent Walmart gain a foothold in online retail. Flipkart is reported as the largest or 2nd largest online retailer in India, to prevent that volume going to Walmart Amazon may have tried hard and pushed price in the process.
[+] [-] wpietri|8 years ago|reply
I think Walmart's stinginess is also an important point here. At this price, plus the additional money they put in, a good ROI gets harder. Bezos has never really cared about short-term ROI, but I wonder if Walmart will be inclined to be impatient or under-invest later because of the high price now.
[+] [-] mtgx|8 years ago|reply
http://www.latimes.com/business/technology/la-fi-tn-amazon-s...
People love Amazon now, but I think it's time to fear it. They're already in bed with governments for multi-billion contracts, and are aiming for monopoly power. They won't behave well for much longer, and I'd argue they've already started behaving badly (raising prices on consumers, lowering commissions on affiliates, and so on).
[+] [-] dominotw|8 years ago|reply
[+] [-] guilt|8 years ago|reply
[deleted]
[+] [-] throwaway6498|8 years ago|reply
As an engineer, Walmart Labs (their research division in Bangalore) is a much better fit to Flipkart's culture than Amazon.
The engineering talent pool in Walmart Labs and Flipkart are quite similar. In Bangalore, there are a handful of companies like Google, Amazon, Walmart Labs, Flipkart, and LinkedIn who can really pay the big bucks necessary to hire the topmost talent from India.
Among these, Google has a laid back culture and does not really excel in retail. Amazon has a stressful culture and I know plenty of people who could not take the stress and long hours of working in Amazon beyond a year and moved to one of the other four companies.
Walmart Labs, on the other hand, is quite similar to us. I think there will be a good exchange of ideas and skills between the two companies.
By the way, since a lot of people are commenting here that Amazon is killing it and they are number 1. That's true. But that's not a very relevant metric. For the owners and employees of a company like Flipkart, it is not all about being number 1. It is more about being able to make substantial profit and pay the employees well enough to keep competing with the likes of Google, Amazon, and Walmart Labs in order to hire the topmost talent.
Granted Flipkart is not doing very well in making good profits right now but we are trying to make the areas where Amazon is weak at as our strengths. For example, Amazon at this time does not ship large products (things that are bigger than what you can hold in a hand) to small towns and villages. We are trying to excel in that and it has helped us survive so far. With us becoming teams with Walmart Labs, I am hoping we will do even better.
[+] [-] nonamechicken|8 years ago|reply
[+] [-] tinyhouse|8 years ago|reply
"Flipkart’s board ultimately decided a deal with Walmart is more likely to win regulatory approval because Amazon is the No. 2 e-commerce operator in India behind Flipkart and its primary competitor. Amazon is out of the running unless Walmart hits unforeseen trouble."
Doesn't sound like a battle to me.
[+] [-] vpribish|8 years ago|reply
[+] [-] freehunter|8 years ago|reply
You don't have to win every battle to win the war.
[+] [-] eight_ender|8 years ago|reply
[+] [-] bhouston|8 years ago|reply
https://www.alexa.com/siteinfo/flipkart.com
https://www.alexa.com/siteinfo/amazon.in
[+] [-] anilshanbhag|8 years ago|reply
[+] [-] hahla|8 years ago|reply
[+] [-] nkristoffersen|8 years ago|reply
[+] [-] piyushpr134|8 years ago|reply
https://economictimes.indiatimes.com/small-biz/startups/batt...
[+] [-] bruceb|8 years ago|reply
Can Flipkart succeed? maybe but 2 years from now if they didn't have this buyout I think they would have be a for sure in 2nd place. FK needed Walmart as much as Walmart thinks it needs FK.
[+] [-] bradhe|8 years ago|reply
[+] [-] wil421|8 years ago|reply
It looks like play to stop Amazon’s growth more than technology.
[+] [-] emeerson|8 years ago|reply
Google's too disorganized and they don't have any supply chain tech built up. Amazon has years of supply chain infrastructure (both software, physical systems and organization) including supply/demand forecasting models and warehouse operational investment (Kiva systems, etc...).
The only differentiation that Google adds to Walmart is: - Top-talent engineering resources & brand which attracts talent to work on these problems - Layers of developer tooling and services that remove the "systems at scale" development curve of startups and smaller companies.
Now if Alibaba teamed up with Walmart... (read: acquired).
[+] [-] linsomniac|8 years ago|reply
This last week, Amazon announced they are increasing Prime to $120/year, and I started thinking about whether I needed Prime. For video, Amazon is barely usable these days IMHO. I'm mostly watching entertainment on Youtube, mostly how-to or edu-tainment stuff which Amazon doesn't have much of. Pretty much anything I reach out to watch, I have to buy from Amazon. Their music service has been useless to me too, I started with Google Play by uploading all my music, and could never get started with Amazon because it was too limited.
The most compelling thing about Amazon is it is one place i can go that has pretty much anything I'm looking for. Drawer slides, Sugru, specific DIY tools.
I gladly pay $15/mo for Google Play Family (music, no commercials on Youtube, for me and my family). But, $10/mo for Amazon is starting to feel questionable, when Google Express gives me a similar experience, without the pain of Amazon Pantry (filling a Pantry box), and Walmart will let me buy groceries online and then will bring them out to my wife's car on her way home (she works a block from the store that provides that service).
I think it's getting harder and harder for Amazon to justify the $120/year. Curious what other people are thinking.
[+] [-] dsugarman|8 years ago|reply
[0] https://techcrunch.com/2018/03/19/google-introduces-shopping...
[+] [-] bob_theslob646|8 years ago|reply
Google's AI tech is superior than others in image and speech recognition as well as search. This mostly has to do with them literally buying all the AI talent.
Maybe a possible partnership with Waymo for level 4 driving tractor trailers.
[+] [-] casefields|8 years ago|reply
https://www.cips.org/supply-management/analysis/2017/june/ca...
[+] [-] asperous|8 years ago|reply
[+] [-] mr_toad|8 years ago|reply
Anti-trust people would be all over that.
[+] [-] brainless|8 years ago|reply
Flipkart was the favorite child of online commerce and had dominated the space in India in the first 5/6 years. I have been an active customer. They did bring on large deals, like Motorola Moto G and Xiaomi Mi phones launching exclusively in India through them.
But as with our modern connected world, competition is global. Amazon is a huge brand. Even in India the software developer world literally bets on AWS. Yes brand presence is a thing in marketing/sales psychology. Amazon started offerening faster deliveries and that I what, I think I remember, made me to switch initially.
Early days of Amazon in India were fairly low profile. The product catalog was poor. But if you keep a tab on global brands, you know Amazon is pretty much a predator in supply chain management. So they slowly built up their infrastructure. I still remember having debates a few years ago about which e-commerce player delivers to more PIN codes in India. Flipkart was still a winner a few years back, but that is now history.
I think Flipkart lost focus somewhere, got busy with I do not know what. Their deliveries did not get better. Amazon is a 900 pound Gorilla and very silently played their cards, got customer attention and sales. I easily remember how many Flipkart delivery boxes I used to see on the roads daily, which are now more in the Amazon brand these days.
Oh and one other thing: English is very common in India, at least in the urban consumer - so that makes us very aware of the US companies like Amazon (even Walmart) and when they enter India we do want to give them a try.
[+] [-] allpratik|8 years ago|reply
But there's more to this. It's actually Walmart who is pushing this deal aggressively as they see it as a chance to tap into the increasingly growing Indian market. In past few years, Walmart did try numerous times to set up their shop here but due to certain FDI regulations they simply couldn't get in. Moreover, it is learned that Walmart (once the deal goes through) will be increasingly looking to expand Flipkart's nascent grocery related business. They want to overhaul the farm-to-customer supply chain and hence current stage of Flipkart and their logistics wing could be a real boon for Walmart. Walmart does have few retail stores in India but they are in JV with a telecom company owner Sunil Bharti Mittal.
On the other side, Flipkart badly needs capital infusion as they are bleeding or burning money at a crazy rate. Whatever edge they had currently in India over Amazon is due to Myntra's apparel sales. Flipkart, technologically speaking is lagging behind Amazon. And this is a real pain which almost all online retailers are facing. The same thing happened with another e-comm company SnapDeal (Also backed by Softbank).
One thing is for sure, to capture the Indian market and dominate it, either of these companies had to adapt quickly to cater to tier 2 and 3 cities of India. Whoever rules these cities and improve on last mile delivery experiences in these cities will rule Indian e-comm.
[+] [-] RandomCSGeek|8 years ago|reply
[+] [-] thisisit|8 years ago|reply
But on the other hand they had tons of strategy related snafus like going mobile-only for sometime etc. So, this seems like a good thing to happen, at least Flipkart can't run out of money with Walmart behind it.
[+] [-] enitihas|8 years ago|reply
[+] [-] sandGorgon|8 years ago|reply
Three way if you consider Walmart.
[+] [-] wtmt|8 years ago|reply
India is a highly price sensitive market with almost no loyalty when it comes to online purchases where price comparison is quick(er) to do.
Amazon has a lot of money to tire out its competitors to death. While I don't like Amazon for a few different reasons, the writing was on the wall for quite sometime as far as Flipkart was concerned.
I'd guess many people would be leaving Flipkart in the next one year and either working for the competition or start a new company to compete with it.
[+] [-] xkcdefgh|8 years ago|reply
[+] [-] aresant|8 years ago|reply
1 - google is going to participate in the purchase. Clearly a defensive move v amazon.
2 - us companies will now own the 1 & 2 positions for ecommerce in India. Start difference w China and somewhat surprising given Indias excellent engineering and biz culture
[+] [-] deanCommie|8 years ago|reply
[+] [-] deafcalculus|8 years ago|reply
Walmart could come along and directly compete in the market by themselves. Wonder why this acquisition is needed at all. There's hardly anything defensible in Flipkart's assets, and this acquisition isn't at a deep discount.
[+] [-] devposter|8 years ago|reply
[+] [-] john58|8 years ago|reply
[+] [-] known|8 years ago|reply
"A woman will buy anything she thinks the store is losing money on" --Kin Hubbard
[+] [-] billfruit|8 years ago|reply
[+] [-] joering2|8 years ago|reply
[+] [-] yalogin|8 years ago|reply
[+] [-] slackstation|8 years ago|reply
[+] [-] tspike|8 years ago|reply
[+] [-] abhi3|8 years ago|reply
Almost everyone middle-class and up can atleast read English so makes sense that online retailers use that.
[+] [-] dingo_bat|8 years ago|reply
[+] [-] sumedh|8 years ago|reply
[+] [-] unknown|8 years ago|reply
[deleted]