Amazon have made a formal offer to buy a stake in Flipkart according to CNBC TV18. This competes with Walmart who are already at an advanced stage of talks.
The problem for both companies in the race to acquire or partner with Flipkart is eBay. eBay India became a part of Flipkart in 2017 and eBay invested $500 million in cash signed an agreement to cooperate in the future.
The big problem is the cooperation agreement, the exclusive agreement set out how eBay and Flipkart will jointly pursue cross-border trade opportunities to make eBay’s global inventory accessible to more Indian consumers and the crucial word is ‘exclusive’.
“The combination of eBay’s position as a leading global ecommerce company and Flipkart’s market stature will allow us to accelerate and maximize the opportunity for both companies in India. eBay is committed to winning in India in partnership with Flipkart. Our exclusive global trade partnership will allow eBay and Flipkart to reach even more consumers around the world.”
– Devin Wenig, CEO, eBay in April 2017
Rumour has it that the exclusivity was a four year deal so there’s still another three years to run. It probably doesn’t cover groceries, but that will be the market segment of least interest to both Walmart or Amazon. They want a cut of the general marketplace business.
For a deal to be done it’s likely that either Walmart or Amazon would have to do a side deal with eBay to get them out of the picture but that doesn’t sit well with eBay’s commitment to ‘winning in India’. Whatever financial incentive may be offered, India is just about the fastest growing ecommerce territory in the world and the most populous. For eBay to entirely give up on this territory would be a major set back for the future as they’re hardly likely to reacquire eBay India although, however unlikely, that’s not an impossible solution. It’s also not that attractive or why would eBay have thrown their lot in with Flipkart in the first place.
It’s hard to see eBay and Amazon coming to an amicable agreement to share the Indian marketplace business when they’re competitors in the rest of the world. A Walmart/eBay partnership would also appear to make for strange bedfellows with Walmart as a retailer and marketplace and eBay a pure marketplace.
Interest in Flipkart is high and it’s likely a deal of some sort will take place. If Walmart wins then they will have a major foothold in India to compete with Amazon. If Amazon win then eBay will be wiped out on the continent and Amazon will have removed all major marketplace competition in India. Or Flipkart could be hamstrung by eBay’s prior investment and the two tied together will have to compete head on with Amazon who will undoubtedly continue to invest eyewatering sums in an attempt to conquer and dominate the nation’s ecommerce.
3 Responses
who cares as long as we can sell at a profit with someone somewhere
its all above anything we can influence
this is what was on last eBay call in 1Q18 -more detail than above
On Flipkart, look, I won’t speculate or comment on what Walmart may or may not do. I’ll just reiterate what our relationship with Flipkart is, which is we made a meaningful investment last year. We have an exclusive commercial relationship that has roughly three years left to run, and that is a relationship that makes us both the exclusive importer and exporter of goods on the Flipkart Marketplace. We’re happy with that partnership. We’ll wait and see how things evolve, but I won’t comment because we’re not a party to any conversations that may or may not be happening with Flipkart or other parties.
All of this is a massive shame for India.
It’s likely the Amazon bid won’t go through, but the Walmart deal is not much better.
A duopoly is the last thing a nascent eCommerce market in India needs – and more importantly a duopoly by foreign companies.
India really should have done a China and encouraged local brands – blocking foreign companies from competing until the locals had a decent footing – only opening competition when the locals have enough market share to hold their own.
Amazon treats its merchants in an absolutely horrendous manner. Copying their data, competing against their own merchants, atrocious customer service etc.