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<ul><li>Competition heats up after <keyword id="80487" type="COMPANY" weightage="20" keywordseo="walmart">Walmart</keyword> closes its $16 billion acquisition of <keyword id="6354742" type="COMPANY" weightage="20" keywordseo="Flipkart">Flipkart</keyword>.</li><li>Alibaba and <keyword id="18635" type="CITY" weightage="20" keywordseo="Amazon">Amazon</keyword> are said to be eyeing large investments of their own.</li><li>Conventional retail and <keyword id="35621" type="PERSON" weightage="20" keywordseo="e-commerce">e-commerce</keyword> players are coming together for a hybrid online-offline business model.</li></ul>A turf war is about to break out among Walmart, Amazon Inc. and <keyword id="163405" type="COMPANY" weightage="20" keywordseo="Alibaba-Group">Alibaba Group</keyword> as the retail giants make aggressive moves to expand into <keyword id="3658" type="COUNTRY" weightage="20" keywordseo="India">India</keyword>. And it is highly likely that this will lead to a massive shakeup of the Indian retail space. Last week, Walmart said it had <a href="https://www.businessinsider.in/indias-competition-regulator-has-given-the-walmart-flipkart-deal-a-greenlight/articleshow/65337242.cms">closed</a> the $16 billion (₹1,118 billion) deal to buy the majority (77%) of Flipkart, India’s largest e-commerce company, following regulatory approval. This is Walmart’s biggest acquisition till date. In its aftermath, Alibaba and Amazon are said to be eyeing large investments of their own, according to media reports. Alibaba is said to be <a href="https://www.livemint.com/Companies/1mvbhDUjZd9khrSUroW5MM/Alibaba-may-invest-5-billion-in-JV-with-Reliance-Retail.html">considering</a> a $5 billion (₹350 billion) investment into a joint venture with <keyword id="58448" type="COMPANY" weightage="20" keywordseo="Reliance-Retail">Reliance Retail</keyword>, India’s largest retailer in terms of sales, in part to take on competition from Amazon and Flipkart. While Amazon, along with co-investors, is mulling an investment in the Aditya Birla Group-owned grocery chain, More, for an enterprise valuation between ₹45 billion and ₹50 billion. Alibaba has reportedly also held talks with other Indian retail chains including Future Retail. In the past few years, Amazon has pumped in over $5 billion into India, its fastest growing market. Amazon and Walmart have been in fierce competition in their home market, the US, for quite some time, while Alibaba and Amazon are head-to-head in China. Some fear that Walmart’s push into India could potentially have an adverse impact on the larger Indian retail space in the long term, particularly on the small brick and mortar retailers in the country. A nation-wide trade lobby group plans to protest the Flipkart acquisition by going on a nationwide strike in the coming months. Currently, over 95% of India’s consumer retail market remains unorganised, representing a huge untapped opportunity for organised retail chains. India has long restricted <keyword id="44749" type="ORGANIZATION" weightage="20" keywordseo="Foreign-Direct-Investment">foreign direct investment</keyword> in multi-brand retail to protect local grocers but allows 100% foreign direct investment in e-commerce companies that use the “marketplace” model. It is currently considering bringing in regulation for the e-commerce space and according to a recent draft proposal, may allow 49% foreign investment in e-commerce companies that use the inventory model. Walmart in its recent statement said its future investments into India will be directed at supporting farmers, supply chain development and reducing food waste. Strategy shift: Going hybrid Walmart’s acquisition of Flipkart and Amazon’s interest in More are the latest examples of large retailers adopting a hybrid business model of offline and online after years of experts predicting the disruption of traditional retail by e-commerce companies. Alibaba and Amazon have recently been focusing heavily on offline and online in their home markets – Amazon with its acquisition of grocery chain Whole Foods and Alibaba’s ‘New Retail’ strategy, which combines e-commerce and conventional retail in China. That rationale appears to be flowing down into their India strategy as well, points out Mrigank Gutgutia, engagement manager with RedSeer Management Consulting. Amazon also owns a 5% stake in Indian brick and mortar retail chain Shoppers Stop. While the Walmart-Flipkart deal is certainly encouraging for e-commerce players, even after 10 years and 100 million shoppers, Indian e-tailers have thus far managed to penetrate only about 2.7% of the overall Indian retail market, indicating the pressure to diversify their reach, notes Gutgutia. “While e-tailers have got their growth mojo back, everyone is starting to realise that pure online models will only let them capture limited pie,” said Gutgutia. “There is a need for change,” he added. Overall, as Indian e-commerce market matures further, e-tailers are realising that pure discount-driven models are no longer going to work. “What is needed is genuine innovation to cater to specific traits and needs of Indian buyers -- especially in offline-heavy categories like fashion and grocery,” said Gutgutia. According to RedSeer, this multi-channel approach will become dominant among organised retail players in the coming years, particularly for e-commerce players. Other e-tailers who have ventured into offline include furniture retailer Pepperfry with its studios and fashion retailer Myntra's Roadster stores. Regardless of how the investment landscape pans out and who buys whom, and as competition gets more intense for existing e-commerce and offline retailers, ultimately shoppers and customers are expected to win. As for small retailers, Gutgutia says they could see a positive impact if they work on a partnership model with organised retailers.

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Clash of the titans: Amazon, Walmart and Alibaba to battle it out in India

Rimin Dutt

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