According to Adrian Lee, Research Director, Gartner, with Walmart Flipkart Deal the market should expect the status quo to remain within the year after the Flipkart-Walmart deal is completed. This is an extension of Walmart’s global expansion strategy. This should not be observed without mention to Alibaba Group’s intent to become the third player in India.
On Competition Lee said, “I see the competition getting more aggressive as Amazon counteroffers Walmart for a stake in Flipkart. Both have their own sizeable cash reserves, and the outcome in India will determine the access to its growing middle class consumers for dominance, outside of the U.S.”
“Consumers should not expect significant changes in their shopping experience. However, user choice should be improved, with a greater range of Walmart private labels differentiating the merchandise. Flipkart will diversify its inventory to attract more Indian consumer segments that still haven’t started shopping online.”
“With the massive user base, India looms as an attractive market for retailers. It’s currently estimated that 15% (200 mil) Indian consumers will be shopping online by end of 2018, and the relatively untapped growth potential is attracting the commerce giants. Homegrown companies stand to benefit in the long run. As consumers are more attuned and comfortable to shopping online with ecommerce marketplaces, we see vertical specialists (largest categories being fashion, second electronics) benefiting. High value, more discerning consumers who want differentiated choices and unique offers will seek out specialists to fulfill this need.”
“Smaller players constantly face a problem of scaling up their operations. However, this does not mean that they will be forced to exit. The smaller players in many cases are more agile and open to new business models. They should concentrate on specialization within their domains to build up a valuable cache of users seeking differentiated retail experiences.”
“For now, as ecommerce penetration in India remains low (at 15%), I fully expect discounts/promotions to continue unabated. As the ecommerce players mature into more profitable businesses, it is very unlikely that discounts will stop. More of the promotional support will be passed back to the suppliers who want the user traffic.”