When Walmart, the no. 1 ranked Fortune 500 company, picked up a 77% stake in homegrown e-commerce company Flipkart, there were murmurs about whether the U.S. giant had overpaid to get into the Indian market. After all, Walmart forked out a staggering $16 billion for a company and a sector where profitability remains uncertain and policy tweaks can change the game anytime. But Flipkart is a long-term bet for the global behemoth and clearly,these factors had been taken into account in view of what the Indian market has to offer. Look at the big picture, and it becomes clear why Walmart was ready to look at India so determinedly.
Today’s India is a market that few global companies can afford to ignore,more so in the consumer space. Rising income levels, aspirational shoppers, cheaper data powering the smartphone and telecom boom are factors which have contributed to creating a new Indian consumer who just cannot getaway from the urge to splurge. While shopping malls have mushroomed across the country, including in smaller cities and towns, e-commerce has come into its own with the millennial consumer preferring to checkout all kinds of options—from furniture to food to groceries to electronic appliances—on digital devices. Consider some figures: In a country of over 1.3 billion, 420 million millennials are driving this consumption boom. Over 350 million Indians—more than the total population of Walmart’s home country—belong to a family that has a total income of over ₹25,000 a month and close to 500 million have access to the Internet. And a recent report by the World Economic Forum with Bain & Company says India is poised to be the third largest consumer market, behind only the U.S. and China. The WEF-Bain report sees consumer spending growing from $1.5 trillion today to $6 trillion by 2030. All in all, a recipe tailor-made for a dramatic entry by Walmart, which has been sniffing around the Indian market unsuccessfully for a while now (remember its earlier foray with Sunil Bharti Mittal’s Bharti Enterprises?). No wonder Walmart chief executive Doug McMillon sounds so bullish about India when he calls it “one of the most attractive retail markets in the world”.
In our cover story this month, Debabrata Das and Deepti Chaudhary, along with our team of reporters, tell you why Walmart’s acquisition of Flipkart is clearly what we at Fortune India call the “Move of the Year”. Yes, American rival Amazon is firmly entrenched now in India and is ramping up both investments and growth plans, but India is too exciting and promising a market for Walmart to shy away from. And Flipkart—with its size, scale, and brand equity in e-commerce—is clearly the best bet for Walmart in that context. The coming days will see this intense battle between two of the world’s best-known companies slugging it out on Indian turf. And it’s going to be an exciting face-off to track.The government, of course, is also keeping a close watch on how the e-commerce sector shapes up. For the deals-hungry Indian shopper, this is a bonanza like no other.
The cover story apart, the Fortune India team also does some crystal ball gazing and tells you what 2019 could hold for us, whether it’s business, politics, or entertainment. The big story to watch, of course, will be the general election in the middle of the year. 2019 promises much drama, so hang on to your seats. Happy New Year!
This was originally published in the January issue of the magazine.