A company trying to enter the market for last 10 years buys out a company making losses for last 10 years and it is a milestone for all the wrong reasons.
Walmart – A misfit for Indian culture: Walmart sacked the CEO (Raj Jain) and CFO of its JV with Bharti Group, on ethical grounds (both of whom were promptly absorbed by Sunil Mittal). Walmart launched an internal probe for $25 million spent on lobbying in India, though nothing came out (Government of India also unearthed nothing, though Walmart itself admitted that 150 Cr were spent for bribing corrupt Indian politicians and officers). Nothing happens in India without a bribe and Walmart has never understood this concept, and I am not sure it ever will.
Walmart – A tortoise to hare strategy: After more than a decade into the Indian market, Walmart has 21 Stores to show for its efforts and a turnover of 3500 Cr. Now, suddenly it has a business of Rs. 20000 Cr in the name of Flipkart with no accompanying manpower bandwidth of its own and dependent on erstwhile Flipkart resources who have no skin in the game of running a sustainable business.
Walmart – A misfit for e-commerce itself: E-commerce companies are nimble, adaptive and ingenious, anything but what Walmart gets associated with its unwieldy culture.
Walmart – A muddle of local and parachuted leaders: Walmart has never been able to make up its mind on promoting local leadership or bringing in its managers from abroad resulting in a chaotic thinking and execution. The same thing is going to happen with Flipkart.
Walmart – $2 billion equity is too small: Walmart is spending $ 16 billion, but the fresh equity is only $2 billion. Flipkart losses LY was $1.5 billion, which means Walmart has bought the cover for only a year, what happens the year after?
Flipkart – A mobile seller: Flipkart is not an e-commerce player but a one a half trick pony with mobile sales being the category leader. What Walmart gets is a mobile seller who undercuts everybody in the market.
Flipkart – The half pony of apparel: With Myntra and Jabong added later, this is the only other significant category of Flipkart. However, these are also loss-making entities with no future in sight.
Flipkart – All investors, no owners: Flipkart has been perpetually run by investors in the lookout for fresh investors to kick the can down the road. Now, suddenly Flipkart has an owner, who cannot sell further.
Flipkart – A cash guzzler: Flipkart has never made any profit and given its structure, never will. Amazon has the liberty of its other businesses to keep investing in India, how will Flipkart’s appetite for losses be fulfilled by Walmart?
Flipkart – A continual churn at the top: Flipkart has no leadership apart from Kalyan Krishnamurthy, it never actually needed one. Now, it has to get over the acquisition blues and the regular stuff and the pressure of earning money with no manpower bandwidth.
In nutshell, Flipkart is a name of passing the parcel game, and now the music has stopped. Walmart has bought a dead investment which it does not understand, in a country which it cannot fathom – cannot spit, cannot gulp.
2020 – Any takers for Flipkart at $4-5 billion? Or lights out.
PS: The biggest loser is India, as a country. Earlier, at least for the namesake, Flipkart was an Indian company with Sachin Bansal and Binny Bansal. Now, with Amazon, Walmart and Alibaba (with Paytm as its front), all of the e-commerce of India is with foreign ownership. So much for thinking about the future with Indian leaders.