The under-works US $12-billion Flipkart-Walmart deal has left merchants selling products through the e-commerce platform jittery as they claim to be clueless about the ongoing negotiations and its possible impact on their business.
According to a PTI report: These sellers are demanding clarity on the way forward on the grounds that they too need to prepare their business plans accordingly, in light of the deal that is likely to value Flipkart at about US $20 billion.
According to the spokesperson of the All India Online Vendors’ Association (AIOVA), which has 3,500 sellers on large platforms like Flipkart and Amazon, the sellers community has received no communication or update whatsoever so far on the protracted talks that have been going on for months now.
“There has been no communication from Flipkart or other parties involved in the matter. While we understand that the deal discussions are private, it leaves us in the dark as to what is the future for us on the platform. We want to get clarity on the way forward as we also need to plan accordingly,” the AIOVA spokesperson told PTI.
The comments are significant given that global retail giant Walmart is inching closer to sealing the deal to buy a majority stake in Flipkart for as much as US $12 billion, even though rival Amazon is still jostling to turn the deal in its favour.
Irrespective of the final suitor, the Flipkart buy would be one of the largest deals in the Indian retail sector and by far, the biggest in the country’s booming e-commerce market.
When contacted, a Flipkart spokesperson told PTI, “There have been speculations for the last six months of Flipkart being in and out of negotiations with several parties. For us, we know that we we have remained steadfastly focused on growing the Flipkart business and will continue to do this along with our seller ecosystem.”
But the proposed deal has the sellers in a bind for more than one reason. Besides the grouse of being left out of the loop on such a crucial transaction, the sellers also fear that Walmart may look at bringing in its own private labels via Flipkart to the Indian consumers, adding to competitive pressures.
“Walmart may look at bringing in its own private labels via Flipkart to the Indian consumers. These products would be brought in at hyper-competitive prices, which will cannibalise the market and make it difficult for other sellers to operate. We are studying the situation and will take appropriate action, including the legal route, if necessary,” the AIOVA spokesperson was quoted by PTI as saying.
The spokesperson added that the government needs to monitor inflow and outflow of funds in marketplaces (like Flipkart) when such deals take place in order to ensure that all the stipulated norms are adhered to and no irregularities take place.
Walmart is likely to buy stakes of multiple Flipkart investors, including that of Tiger Global Management and Softbank, to end up with at least 60 per cent holding and the deal could be announced in the coming days, according to sources. The deal with Walmart, involving primary and secondary shares, is expected to value Flipkart at about US $20 billion.
As it is, right ahead of the blockbuster deal, Flipkart has bought back over 1.8 million shares worth more than US $350 million from minority investors valuing the company at US $17.69 billion as per information filed by Flipkart with Singapore’s Accounting and Corporate Regulatory Authority. The data was sourced by data platform Paper.vc, which claimed that the move will also help Flipkart convert itself into a private company under Singapore law.