About six days ago, Walmart undertook a historic acquisition[1] and its most expensive one in recent memory when it swallowed India's ecommerce leader Flipkart by shelling out $16 billion for a 77 percent stake.
There is much for Walmart's investors to celebrate in the firm spotting the right opportunity at the right time to safeguard its place in a digital future dominated by the ever-rampaging Amazon. After unspectacular efforts in China and Japan, this US retail leviathan may never get another opportunity to assure itself of a captive, fast-growing and potentially mammoth audience for its wares in the online realm. India represented its last chance -- as it was Amazon's, following getting shut-out in China -- and the Bentonville, Arkansas-based retailer has been virtually forced to play this hand or risk regretting it forever.
Or so the narrative goes. The big question now making the rounds in the euphoric aftermath of the deal and putting a dent into that story is whether the deal will be worth it at all. Will it make economic sense for the company once you shove aside all the familiar hype about India's burgeoning middle-class? Naysayers who instantly weighed in after the deal announcement happened to be no other than the company's investors. Walmart's stock took an instant beating[2], losing 5 percent in early trade and wiping some $10 billion of its market cap.
What investors are undoubtedly looking at are two things: One, this is a whole new game being played in the world of bits and bytes and online purchases that is alien -- in fact, even anathema -- to a retail giant more at home in the brick-and-mortar world. The online business model is an eminently profligate one that is