
Walmart Beats Amazon in $15B Flipkart Battle - dsr12
https://www.bloomberg.com/news/articles/2018-05-04/flipkart-board-is-said-to-approve-15-billion-deal-with-walmart
======
throwaway6497
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.

~~~
wpietri
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.

~~~
skinnymuch
Is anyone besides Google contributing. I think I read Google is giving $3B so
that’s a decent chunk.

I’m guessing they wanted Softbank out for control in general and since
Softbank loves to control, otherwise they could’ve saved another $4B and let
Softbank keep 20% control.

------
throwaway6498
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.

~~~
nonamechicken
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.

~~~
throwaway6498
What you are reporting is correct and I can understand a customer's
frustration due to it.

But what you are saying is not the opposite of what I am saying.

You are saying: Flipkart is weak at delivering small items to small towns. I
agree with this.

I am saying: Flipkart is strong at delivering large items to small towns and
Amazon is weak at that.

Do you have examples where Flipkart did not deliver a large item (certainly
much larger than your home router) such as a fridge or table to your small
town? That would be an interesting example that would contradict what I am
saying.

~~~
webbrahmin
Flipkart was not delivering a Dell monitor worth rs 30000 to NOIDA which
adjoins capital New Delhi. Purchased it from Infibeam.

------
tinyhouse
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."

Doesn't sound like a battle to me.

~~~
vpribish
The more I read from Bloomberg the less I respect them.

~~~
GW150914
It’s incredible that they think this kind of steaming “content” is worth $40 a
month!

------
bhouston
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.

[https://www.alexa.com/siteinfo/flipkart.com](https://www.alexa.com/siteinfo/flipkart.com)

[https://www.alexa.com/siteinfo/amazon.in](https://www.alexa.com/siteinfo/amazon.in)

~~~
anilshanbhag
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.

~~~
dopamean
I know very little about which metrics to look at but this seems like an even
more wrong metric to go by. What does number of app reviews prove other than
that the app is good at pushing people to review it?

~~~
anilshanbhag
Both apps don't urge users to go review their app on the play store. On this
assumption, since both serve similar demographic of users - the average number
of reviews written per week has to have a strong correlation to number of new
users.

------
bradhe
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.

~~~
wil421
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.

~~~
remir
Google has the most advanced search engine on the web. Most people do a Google
search for product and probably end clicking on a Amazon link.

Instead of leaving Google, you could click on the product, see reviews and buy
it directly from Google's UI.

~~~
mbesto
The GP was saying Google's tech could enhance it's supply chain, not it's
customer acquisition. That's not a tech advantage, that's called leverage.

~~~
hbosch
Doesn't Google have a history of being unsuccessful at supply chain? Their
Motorola acquisition was a failure on the production side (though some would
say a net win on the patent and IP side). Instead of using their tech for
supply chain recently, as another example, they went ahead and purchased many
of HTC's knowledgable people in Taiwan...

Apple has an incredible grasp on supply chain, and Walmart and Amazon have a
similar grasp on logistics. I think a lot of the knowledge in this space is
about control and not necessarily solved by tech.

------
brainless
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.

------
allpratik
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.

~~~
RandomCSGeek
> 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)

------
thisisit
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.

------
enitihas
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.

------
sandGorgon
India is now poised to be the only country in the world with a two way fight
between Amazon and Alibaba.

Three way if you consider Walmart.

~~~
mars4rp
This is crazy! As we all know, online retailers are killing local businesses,
in US it might make sense because the profit goes to another sector of
economy, Amazon is going to hire more developers and invest in other products
that in long run might not be total lose for the whole economy!

what a country like India is going to gain by letting American and Chinese
companies destroy her local businesses and take the profit to the mainland!

Is this the new colonization?

~~~
actuator
Not colonization but this is what happens when most Indian businesses won't be
willing to burn huge amount of money to get growth initially. That lack of
funding environment is a good opportunity for cash rich foreign investors who
have an appetite for that kind of growth.

I can only think of one recent IPO in India from tech space which did well,
Infibeam[0]. But then again they had a good business model which didn't
require burning a lot of money.

0\.
[https://www.valueresearchonline.com/stocks/snapshot.asp?code...](https://www.valueresearchonline.com/stocks/snapshot.asp?code=23319)

~~~
enitihas
It will be very difficult for an Indian startup to burn money to compete with
a US competitor. Considering that the US is a much larger market, the
reveneues of the US based competitor are simply going to be much higher. For
example, Facebook makes $100 per North American user per year. Even if there
was an Indian startup starting from India, how would they make similar kind of
money? The US is a really large homogeneous market with good enough
infrastructure support, that businesses starting from US will always have the
revenue advantage over other nations. The only counter point we have seen is
the China model, where the Government takes stepes for protecting local
companies. Yes, there are some B2B companies outside the US that are doing
well, but I can't think of many B2C ones.

~~~
actuator
Agree with your statement but here I was talking about foreign VCs funding
Indian startups because Indian investors don't have the appetite for it.

You won't be able to compete with an already established player from US if you
do a 1:1 same product. You should try to exploit something that works in the
local market like what Line did for messaging in Japan or South Korea.

------
wtmt
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.

------
xkcdefgh
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

------
aresant
Fascinating that

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
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

~~~
ignoramous
You're right. Engineering [0] and engineer quality [1] in general in China is
way better than in India. It is not even a competition. For instance, Google
isn't setting up shop in India for their AI labs [2]. Another instance is when
large internet companies in India sought talent from overseas when faced with
big-company scale problems [3].

Also, my experience having worked and interviewed candidates in India for over
8yrs doesn't seem to disagree with that sentiment at all.

[0] [https://www.zdnet.com/article/7-chinese-companies-that-
will-...](https://www.zdnet.com/article/7-chinese-companies-that-will-shape-
the-future-of-the-tech-industry-my-week-in-beijing/)

[1]
[https://news.ycombinator.com/item?id=6429793](https://news.ycombinator.com/item?id=6429793)

[2] [https://economictimes.indiatimes.com/tech/software/google-
to...](https://economictimes.indiatimes.com/tech/software/google-to-open-ai-
research-lab-in-china-first-in-asia/articleshow/62056066.cms)

[3] [https://yourstory.com/2015/05/twitter-war-sachin-rohit-
bansa...](https://yourstory.com/2015/05/twitter-war-sachin-rohit-bansal/)

~~~
actuator
[0]. I would agree that Indian startups haven't done something remarkably good
technically till now. One reason can be that a lot of them didn't get to grow
in isolation using government protection from foreign enterprises and
resources. So they were competing against established players with a lot of
experience compared to them. Initially, most of the people who used Internet
in India had some knowledge of English, so it became very easy for US based
companies to penetrate the market as they could mostly launch the same
products without much customization.

[1] and [3] Highly debatable and depends on which company you are hiring for.
Good candidates are going to apply in companies they consider to be good.
Snapdeal wasn't known for its good engineering, work culture or hiring bar. I
don't know which startup the YC commenter interviewed for.

[2] might just be because of lack of active CS research going on in the
country. Most people interested in research leave the country for better
pastures. Btw MSR does have office in India

------
deafcalculus
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.

~~~
devposter
I don't think Walmart is allowed to compete directly in India due to FDI
regulations.

------
john58
Indian e-commerce growth rate looks interesting
[https://news.alphastreet.com/walmart-buys-
flipkart/](https://news.alphastreet.com/walmart-buys-flipkart/)

------
known
I think alibaba acquiring paytm and walmart acquiring flipkart is a wrong
strategy; Both are loss making companies;

"A woman will buy anything she thinks the store is losing money on" \--Kin
Hubbard

------
billfruit
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.

------
joering2
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 ?

~~~
adventured
Amazon has failed at a lot of things.

Amazon search, A9, was originally meant to take on Google back in 2003 as a
comprehensive search solution. It failed spectacularly at that.

The Amazon phone, a shot at Apple's massive profits. A total failure.

Amazon attempted to take on eBay in auctions, they failed.

Amazon attempted to take on Craigslist in classified ads, another failure.

Amazon has been attempting to figure out a way to dominate the music category
for 15+ years, they've repeatedly failed. They're very far behind Apple and
Spotify when it comes to stand-alone music services.

Amazon's local daily deals service, Amazon Local, failed (shut-down in 2015).
They also burned $175m on LivingSocial during the Groupon mania years as part
of that overall sector effort.

They attempted a competing mapping service to Google Maps, that ended up being
a mediocre product (with a few technical innovations) that nobody used. They
quickly discovered how difficult and expensive it is to build a competing
product to Google Maps.

Amazon failed with travel, attempting to go after Priceline's profits, they
shut down Amazon Destinations in 2015.

They failed with Local Register, which was some kind of mediocre shot at
Square's market.

Amazon essentially takes shots at anything that pops up and demonstrates an
ability to make money. They fail overwhelmingly, and then very rarely they get
a homerun like AWS which pays for it all many times over.

------
yalogin
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.

------
slackstation
I may be completely ignorant but, is it weird that the biggest retailer in
India has an English name?

~~~
tspike
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.

~~~
tamizhar
> Some regions (esp Tamil Nadu) are actively antagonistic toward Hindi.

People of any region tend to be antagonistic towards crude attempts to force a
foreign language and culture upon them. Hindi has no common ancestry with
South Indian languages like Tamil. In fact, Hindi-Urdu-Farsi is from the same
language family as English. Therefore, Hindi is just as foreign as English to
South India and therefore it makes much more sense for South Indians to speak
their native tongues and a useful foreign language like English or perhaps
Mandarin in the future rather than be forced to learn Hindi.

------
nocoder
I have worked with e-commerce related companies so I can offer some
perspective here.

The battle in india is far from settled, it is important to look category
wise. Moreover in context e-commerce one should not ignore alibaba backed
paytm which seems to be working on a super app strategy and big basket which
is into grocery.

Website visits- Amazon seems to be ahead. From Jeff's shareholder letter -
"Amazon.in is the fastest growing marketplace in India, and the most visited
site on both desktop and mobile, according to comScore and SimilarWeb. The
Amazon.in mobile shopping app was also the most downloaded shopping app in
India in 2017, according to App Annie. " This does not include numbers for
Flipkart owned myntra I think adding that might take Flipkart ahead since
myntra is the biggest in fashion. Moreover play store might not give a
complete picture since many devices come pre-installed with apps in India, my
phone had Amazon app pre-installed which will not count towards play store
download.

Mobiles - This currently the biggest category in e-commerce. Accounting for
60-70% of sales. Here they are neck to neck but it is hard to make out clearly
since e-commerce is heavily driven by exclusives and brands like Lenovo and
Xiaomi are playing them against each other.

Fashion - Myntra owned by Flipkart is ahead here. Amazon is catching up but is
challenging to match a vertical player in user experience.

Electronics - I don't think there is a clear leader here. Due to logistical
challenges for major brands it is still convenient to buy offline apart from
some sales period when discounts can be really high in e-commerce. Of late
though lot of offline stores are ready to match the ecom players, I saw this
while buying TV plus they had faster delivery and installation. This might
play out like mobiles with lot of Chinese brands who don't have offline
networks competing on pricing and using e-commerce for distribution.

Grocery - Amazon has a lead over Flipkart. It has multiple plays like Amazon
now, Pantry etc. Flipkart is piloting a model similar to now in bangalore. The
competition comes here from alibaba backed big basket which also has
perishables and in my personal experience provides better service vs Amazon.
Walmart might give a boost to flipkart here with its expertise in grocery.
However unit economics are worst in this category. High weight low average
selling price means shipping cost eat up a lot of revenue.

Video - Amazon has more users than Netflix. The challengers here are Jio with
it huge base, cheap data and good library and hotstar with its biggest
strength being Indian TV shows and live cricket and football. This is
extremely nascent in India so every network has their own app but these two +
Netflix seem the most likely to be around for long. Netflixs pricing in India
is pretty high so will be mostly used by the affluent sections and not mass.

This deal was unusually public. I think Amazon was never seriously into it.
The valuation is insane plus Amazon would have run into some antitrust issue
plus this being an election year in India, government might act tough against
such acquisition. The good thing with Walmart is that there might be more
sanity in the market since it is a listed company and can't just burn VC
money.

~~~
throwawayqdhd
As someone who has almost completely abandoned offline shopping, Amazon is my
go to store because it usually has really obscure products.

Like today, I ordered a downrod for a ceiling fan. I don't even know if
Flipkart stocks it.

Amazon has got the long tail of retail right at least

------
robertAngst
Good?

Amazon needs some more major competition.

------
dmitriid
SoftBank. Tencent. The world is increasingly being controlled by a handful of
companies.

~~~
larrik
SoftBank is the one _selling_ though, no?

~~~
dmitriid
I know. What I meant they are everywhere these days.

------
desireco42
It is all fun and games until AliBaba joins the game ;)

~~~
actuator
Already there. PayTM Mall

~~~
balladeer
Their interface is a stuff of nightmares even for non tech savvy users. Their
pricing doesn't boost confidence either which is very crucial in a market like
ours. So I think we will have to wait and watch when it really becomes visible
and starts making a difference.

------
wlabs
Walmart has an awesome research and development labs known as Walmart Labs in
Bangalore. Flipkart has its development headquarters in Bangalore too. They
have awesome engineers too.

Both Walmart Labs and Flipkart hire the best computer scientists and software
engineering talent from across the country. They pay as much as and sometimes
more than what Google Bangalore pays its engineers.

With Walmart now acquiring a majority stake in Flipkart, I can see the two
strong and highly skilled engineering centers coming together and forming a
formidable team to give a tough competition to Amazon.

~~~
elvirs
show me one good thing that came from Walmart Labs.

~~~
blreng
Their GitHub page is also worth looking at:
[https://github.com/walmartlabs](https://github.com/walmartlabs)

How many nice things have Amazon open sourced?

~~~
dlgeek
[https://github.com/awslabs](https://github.com/awslabs)
[https://github.com/amzn](https://github.com/amzn)

~~~
devposter
Are you serious about these links as examples of nice things that Amazon has
open sourced? Most of the projects there are development kits to work with
Amazon products only.

~~~
dlgeek
Check out S2N, Ion, DSSTNE, Carbonado, Guzzle, git-secrets and others.

