Earlier this year, India-based online marketplace Flipkart was acquired by US-based retail giant Walmart in a deal worth $16 billion. Many believed that Walmart overpaid for the acquisition. Binny bansal however, holds a different view.
In a recent interaction with Recode, Binny Bansal said that Walmart got a bargain deal for Flipkart and that the retail giant is making a long-term bet in the Indian market which he believes would pay off over the next five to ten years.
He says that Flipkart was Walmart’s only viable acquisition target in India. Bansal further added, that to make a play in the Indian e-commerce market, Walmart had two options – either to build it or to work with Flipkart.
Before the acquisition, there were umpteen chatters about an eventual IPO for Flipkart. Revealing more about that, Binny Bansal said that Flipkart would continue to push aggressively for an IPO over the next few years, despite the Walmart buyout.
During Recode’s Code Commerce conference in New York City, Binny Bansal said:
We believe you can be way more competitive with the right partners around. The other partner we have is Tencent, we also have Microsoft as an investor. Bringing the right partners on board is crucial, we believe, for success in the future.
Going forward, Walmart will have to invest heavily to make its $16-billion acquisition work. A Mint report suggests that Walmart has told Flipkart’s leadership team to not worry about an IPO anytime soon as the company is viewing Flipkart as a long-term bet that may take years, or even decades, to yield excellent financial returns.
In the Indian market, the biggest competitor of Flipkart is Amazon, which is believed to be marginally behind the homegrown e-commerce firm. Amazon, which started operations in India in 2013, is rapidly growing its presence. To boost its presence, the company has also introduced support for regional languages for its online marketplace.