Wal-kart undescores India’s e-tail potential

Published: May 12, 2018 4:14:29 AM

Online shopper penetration among millennials is already high, at close to 40% across some key segments.

walmart, walmart fliokart, flipkart deal, India e commerceWith Walmart buying a controlling stake in Flipkart—the largest M&A deal in Indian e-commerce so far—the decks are set for a boom in the domestic e-tail sector.

With Walmart buying a controlling stake in Flipkart—the largest M&A deal in Indian e-commerce so far—the decks are set for a boom in the domestic e-tail sector. India’s e-commerce is projected to grow four times faster than total retail over the next five years. With Walmart’s expertise in hypermarkets/grocery retailing, Flipkart will be able to make sizeable inroads in the online grocery retailing.

In fact, Walmart is already present in the B2B cash-and-carry business via 21 Best Price stores. The key for the combined entity will be their ability to scale up from these levels considering that current regulations permit only 49% FDI in grocery physical retailing.

India’s millennial population of 400 million is the largest in the world and is armed with around $180 billion in spending power. The group as a whole would be 36% of India’s population. More importantly, it would form 61% of India’s internet base and 78% of the online shopper base.

Online shopper penetration among millennials is already high, at close to 40% across some key segments. A report by Morgan Stanley says online shopper penetration in India could touch 40% in 2020 (from 12% in 2015), given the large millennial population. Also, time spent on online transactions will increase significantly with rising incomes. Personal grooming products/services, online entertainment (music, movies), and electronics would attract the highest increase in online purchases.

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