Matrimony Business Model in 2019


In the previous blog, we discussed the challenges that were faced by Murugavel Janakiraman when he started BharatMatrimony. We explained the idea and how it was launched, what hardships came in the way. We discussed the way on how he got his first customers and what techniques he used. They took one step at a time and how did they develop their business.

In this blog, we will discuss that what steps he took after the initial steps. We will start with the SEO part.



From an SEO point of view, it is invaluable to have one parent area – with committed pages for every community that comes under the parent site. For e.g.: gave greater expert to the site and furthermore demonstrated ideal in the internet searcher rankings.

Ascended Content Marketing

“Desi Match” magazine was launched for South Asian residents living in the US. It was the first and only matrimony magazine.

“Matrimony Express” – India’s first relationship blog. website gave advice and tips on how people can stay happy in a married life, whereas, BharatMatrimony had made its presence viral in the matrimony sector. With diverse religions and languages, and economic segments, BharatMatrimony was helping people to stay happy after getting married.

What was the need for creating

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The mission of states that

“The future of a country depends on its citizens. Good citizens emerge out of good parenting; good parenting can happen only in a good marriage and we are the gateway to happy marriages.”

To lead a happy and enrich married life is the initiative of

What was the challenge?

It was seen by the team that people were having problems in the relationship after marriage. Some of them were having problems on the first day of the marriage which were lasting for almost 4 years. There were misunderstandings like relationship problems with the In-laws, personal fights, time management, not giving each other the required space and problems with the choice of work. It was because of many reasons that even the guidance from elders and the time was leaving the couples confused. It was obvious that there was no way that these problems were mentioned anywhere.

Thought behind the strategy is a simplified matrimony site which comes with a monthly newsletter with related content and this helps the newlywed couples. The content was quality wise on a higher side which was very helpful for the readers.

“Happy families are the building blocks of the nation. As a leader in the online matchmaking space, we have the responsibility to guide married couples to lead a happy life post marriage. is an initiative to enrich marital relationships and make them meaningful. It’s BharatMatrimony’s guide to a happy marriage.”

Murugavel Janakiraman

Founder & CEO,

The execution

It took almost three months for the marketing team to complete the research on the various challenges faced by the newlywed couples. After extensive research, and with the data given by the couples and also from the inputs from the social circle, the team was able to frame the content and publish it.

The outcome

The goal was to offer valuable content around the early conjugal difficulties and help manage youthful couples to an important relationship and a cheerful marriage. This was accomplished with the site and a month to month pamphlet which has more than 24,000 endorsers and more than 1 lakh wedded individuals get the bulletin each month.

Communication and referrals

Spoken communications and referrals were the main reason for the traffic received. The parents created the profile on the reviews of other parents. BharatMatrimony had the first mover advantage and this was the reason for a strong brand recall.

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This online channel features TVCs made by crosswise over classes that incorporate International TVCs, Assisted Matrimony, Elite Matrimony, and Tambulya in numerous dialects that take into account assorted clients on the web.

Website traffic

The order in which the traffic was directed towards the website was

  • Direct->Referrals->Organic Search->Display Ads->Mail->Social

A strong brand recall is achieved by maximum direct traffic and this was actually seen. People would open their browser and directly came to BharatMatrimony website rather than coming from a referral or ads.

  • The traffic was not coming on the website through emails or organic search or social recall, rather than the traffic came from branding and engagement channels.


  1. Mega Swayamvaram

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Over 10,000 participants from 9 major communities came to the world’s largest Matrimony Meet, which was conducted in Chennai in the year 2007.

Why was such an event organized?

This event was conducted so that the match-making would become quick and a platform was given to the people with similar thoughts who were seeking a better half.

Were they able to pull it off? Yes? Then, How?

  • The characteristics of the brides partaking in the Swayamvaram were given in a position astute ordered booklet containing the subtle elements of the lucky men and the other way around.
  • This booklet included points of interest like rank, stature, weight, and horoscope and so on and sent to the members well ahead of time.
  • Rundown of probable was shortlisted for a gathering to be started.
  • Contact subtle elements of all members from particular ranks would be given at the setting for them to make contacts autonomously after the occasion.


The outcome was huge. People were strolling around with similar thoughts in their minds and they were actually networking and were interacting with each other for the betterment of their future. This gave a big kick to BharatMatrimony brand wise.

  1. Families opting for speed dating

  • Creating strong offline communities was an integral part for BharatMatrimony to build the trust.
  • The first ever Matrimony Meet was organized in 2002 with a thought of meeting the bride and groom face to face where they can discuss all the perspectives.
  • This gave an opportunity for one-on-one discussion.
  1. Special Meet Up

Muruga knows that it is important to know someone whom we want to marry and everyone deserves to choose the best life partner. Keeping this in mind, BharatMatrimony hosted it’s first-ever Matrimony Meet for the physically challenged.

  1. Retailing

The thought was to grow under the lead mark, giving guardians and the more seasoned age that isn’t excessively educated a disconnected channel, making it impossible to convey face to face.

BharatMatrimony’s methodology for online development has dependably been to help it with disconnected retail outlets that clients can visit, converse with delegates. This refines a brand.

  • Approximately 100 retail outlets of BharatMatrimony were opened in the metro cities and the surrounding cities of Delhi in the year 2007-2008. Some of the outlets were company-owned and some of them were under the franchise of BharatMatrimony. The main reason was branding, although some of them were not able to do well, but, they were becoming a known brand. Some of the Tamilians picked up TamilMatrimony instead of BharatMatrimony, so it was like one of them was getting known. The plan didn’t work as the brand strategy was not coming in line with the local brand strategy. Expanding quickly without customization and losing money to the retail outlets led to the shutdown. The Recession also played a part in the shutdown.
  • Muruga did not give up on the shutdown but he decided to re-launch it in a different manner. This time he started the outlets locally and later on planned to expand it nationally. 20 company-owned retail outlets were launched by the name of in Tamil Nadu. This is the way Muruga customized the branding.

The Benefits

  • People took an interest while speaking to the representative in their local language.
  • People took printouts of the selected and shortlisted grooms and brides.
  • It likewise encouraged perceivability locally and accumulation of payments.

The Results

Within a half year, it was clear that the outlets were a colossal achievement and over a time of year and a half, BharatMatrimony propelled more than 100 organization claimed outlets skillet India with a comparable restricted procedure. As of now, it has 140 retail outlets.

  1. Partnering with the government


The only purpose of the partnership with the government was to reach the people living in the surrounding area of the cities. Through this, they could reach too many more brides and groom irrespective of the place.

  • Worked together with the Department of Post, Government of India, to offer BharatMatrimony Membership Cards through post workplaces the nation over.
  • Banded together with the Andhra Pradesh government to give marital administrations through e-Seva, an administration started by the legislature to guarantee innovation achieves everyone – urban and rustic, rich and poor, proficient and unskilled.
  • Tied up with the Government of Kerala to give Matrimony benefits through the Akshaya activity. This is an inventive task went for connecting the computerized partition between the urban and the country to make monstrous financial development.
  1. Offline Brand Campaigns

April 14th, Matrimony Day

  • People celebrated the happiness of the wedding bliss on Matrimony Day, 14th April. BharatMatrimony gave away discounts and offers from many leading brands keeping the spirit of Matrimony Day alive. Even The Hindu published a 4-page supplement titled “Perfect Match” on Matrimony Day and with everyone celebrating it; the day is officially celebrated as Matrimony Day.
  • BharatMatrimony is the reason behind the celebration of marriage.

Guinness Book of World records

To praise their fifteenth commemoration, BharatMatrimony made the world’s biggest photograph collection on Matrimony Day. What was remarkable about this collection was that BharatMatrimony highlighted each couple (who met on their entryway) with their unique wedding photographs.

Outcome: Their message, ‘Marriage is fundamental to anchor a cheerful and sound society’ was generally welcomed.

Let’s take a look at the summary of Marketing


  1. Forceful expansion

With cash in and a solid a dependable balance inside the marriage space, BharatMatrimony had two choices through which they could extend –

A solitary brand system where they could take off more administrations around marriage and a multi-mark technique wherein they could make different commercial centers utilizing a similar innovation and move on a level plane. They settled on both. This is the manner by which they did it–


online marketing

To build the BharatMatrimony brand and speed up the growth, the company introduced services related to Matrimony for a $56 Billion market in India.

  1. Photography (launched in 2015)

Offering professional services in photo shoots and videography

  1. MatrimonyBazaar (launched in 2016)

Wedding services for those who wanted to save time and money while getting married

  1. MatrimonyMandap (launched in 2017)

Helped by checking the availability of the wedding venue and were allowed to book at best prices.

To keep the correspondence and commitment unblemished even post the wedding, BharatMatrimony built up the attached gateways which shared updates and data for and by couples post marriage.

  • Success Stories

It’s a page where the newly wedded couples used to share their experience of a successful marriage. It has a section called Tinies and in this section, couples used to share pictures and stories with their relatives and families.

  • com

On this platform, people used to share all the ideas and experiences post-marriage and this would help the users with the things which they could use.


Muruga saw the accompanying focal points of utilizing a multi-mark procedure –

  • It was anything but difficult to duplicate these commercial centers utilizing the same back-end innovation
  • Scalability wasn’t an issue
  • Also, marital clients aren’t deep rooted clients. The lifetime estimation of a client is typically 3 a year. They just remained on the stage until they got hitched. Once the pursuit is finished, there is no purpose behind them to return to the site. This made it basic to differentiate.

Keeping the structure of innovation set up, Muruga took an official choice and chose to dispatch the accompanying commercial centers successively from 2006 to 2008 i.e. 8 benefits in a traverse of two years. The enhancement helped pick up the piece of the overall industry and these stages were beginning to see development –

  • com: The No.1 Property Portal.
  • com: Help individuals with individual, property and vehicle credits.
  • com: The Online Automobile Supermarket.
  • Mobile 5050: Latest news on telephones, contraptions
  • com: The Online Classifieds.
  • Clickjobs: An occupations entrance
  • Indiapages: The Online Yellow Pages
  • BharatBloodBank – a non-benefit, non-business interface

To be continued…..

In the next blog, we will tell you that how the pricing was decided and what experiments did Muruga conducted along with the data-driven strategy and product updates.


Bharat Matrimony


Everybody wishes to know the journey of a successful startup. What opportunities it saw, what challenges it faced, what solutions it implemented, how the market reacted and how its journey is continuing. Bharat Matrimony is that kind of a startup. 

It is one of the first ones to ride on the internet boom; it has come through lots of ups & downs and still going strong. Let us be part of the journey.

Do you have any idea that how Bharat Matrimony managed to take its name in the Limca Book of world records for documenting the most number of marriages online? 

Well, we will explain the marketing strategy breakdown of how Bharat Matrimony became an IPO from an Idea.

Bharat Matrimony Marketing Strategy

The company’s development story is interesting, persuasive and a decent case of brand advancement that accomplished item/showcase fit on an amazing number of levels with a group of 4000 representatives, and a piece of the overall industry of 60%.

 With 3 million clients and 140 branches in India till date, they have figured out how to always re-examine the brand with mind-blowing premonition.

Let’s take a look at the facts; Bharat Matrimony is a Flagship brand with as a Parent Company. Bharat Matrimony is an online matchmaking and marriage website which runs under Murugavel Janakiraman, CEO.


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Murugavel Janakiraman or Muruga hails from a small town of Royapuram, Chennai, where he struggled from day to day life challenges which came in the way.

One of the challenges was to share 1 bathroom with 14 other people; he did not have electricity at home until the age of 23. His only dream was to get a degree and get a house with electricity and an attached bathroom so that his family wouldn’t have to share the common bathroom.

He got a degree in MCA in 1994 and took up a job in Polaris Chennai as a Tech Consultant. At his job, he had to travel to Singapore and the US for the projects where he unveiled the internet skills with big names like Yahoo, Sify and Rediff who were building their business around the internet and all the other aspects through online at that time.

During his stay in the US for two years, Muruga really missed home and his friends; he missed hanging out with them and also the binge-watching of Tamil movies.

He felt like he was losing the connection with the Tamilian Community and he wanted to connect with his roots really soon.

He started searching for a few websites which published content for Tamilians; content which was on politics, entertainment and movies, but he was not satisfied with the search as he was not getting any way for interactions.

He wanted to do something which no one was doing. There was no type of connectivity for a type of community which was living overseas and no one has thought about that.

A repeating design that was seen was that best business people likewise happen to be the initial ones in the space, otherwise known as first movers. It is all about the early bird catching the worm.


The was launched in 1997 by Muruga which is called Thamizhar Pakkam (translates to For the Tamil community), this was made with the intention to connect with the Tamil community. The platform had services and engaging channels which were content driven.

These included –

  • Tamil Matrimonial: Look for prospective brides or grooms
  • Make Friends: Connect with others Tamilians across the world
  • Tamil daily calendar: Calendar marked with auspicious dates
  • Reminder: Indian festival reminder
  • Travel: Book flight tickets through travel agencies
  • Religion and charities: Find religious and charitable groups in Tamil Nadu
  • Radio: List of radio stations that you could tune into and listen to your favorite songs

The engaging content was planned as following –

  • News and Magazines: Tamil political news
  • Movies and Cine Stars: Tamil Cine News, Photos & Interviews (Updated Weekly)
  • Literature and people: Famous people in the field of literature
  • Institutes: A database of educational institutions


small business ideas

In 1997, there was limited social media advertising and Muruga was on a tight financial budget. So, he used his creative instinct and he used the following methods to attract the audience to his business.


Stores in the US

Most of the Indians went to the local grocery stores in the neighborhood area. Muruga printed 500 pamphlets and distributed them among all the nearby Indian stores in the US.

Friends in Chennai

Back in Chennai, he asked a few of his close friends to distribute those pamphlets in the stores in nearby localities by taking out a print out.

Online marketing discussion forums

With no social channels in the targeted area, Muruga targeted discussion groups like Google and Yahoo. He joined their conversation and started mentioning to them.


When one created a new website it was difficult to promote back at that time. So, Muruga found some websites which were ready to promote him in return of a small favor for the employees.

Like if someone would create a profile on the website then they will get a 10% discount on the next travel tickets.


Likewise, with the approach of Google and Yahoo web search tools, Muruga began utilizing ideas of Search Engine Optimization (SEO). His essential spotlight was positioning on the principal page of Google, Yahoo, and other web search tools.

Thought to Demand Validation

With all the hard work Muruga did, the golden results followed:

  • Almost 3000 people created their Matrimonial profile
  • The audience made him a pioneer in the social network when 2000 people made a profile on “make friends” profile.
  • The Greeting Card service was also being used frequently.

Muruga saw that people were more inclined towards the matrimonial services and the other services are being used comparatively less.

He received an email from a user which stated that he found a Tamil bride through their website and this was a big achievement for him. This showed that people were more interest in the matrimony stuff.

Muruga launched Tamil Matrimony and Telegu Matrimony which later evolved to BharatMatrimony.

How did they develop their business?

The year of 2000 saw a wave of global panic and a global recession as the dot-com had gone down in the US as most of the companies which were receiving a capital investment from different joint ventures, were shutting down. Because of this, Muruga had to quit his job.

One step at a time

Initially, Muruga was investing $1000 but when he did not have a regular income from his job then he had to think of another way to invest in his website.

So, he had to create a new method where he could generate some revenue. He settled down on the paid version of the website with some terms and conditions. Of course, the paid version was also there.

The Free VersionThe Paid Version (Rs 200 or $4.5 annually approx)

Create a new profile

Add initial information

Talk to other people

All features of the free version

Profile Boosting

Uploading of multiple photos

Horoscope information

Users were allowed to place Newspaper Ads

What were the results?

The results were astonishingly good, Muruga figured out how to make back the initial investment with income got from paid clients.

During this time, Muruga did not want to stall and he wanted to make more money. More features were added on the website.

  • Free users were allowed to add images
  • They were allowed to bookmark their shortlisted profiles
  • They were able to save searches and scan photos

If you wanted to contact a certain profile then you will have to become a paid member.

New pricing scheme was also introduced

  • $15 for 3 months: Bride/Groom living outside India
  • $25 for 6 months: Bride/Groom living outside India
  • $15 for 6 months: Bride/Groom living in India

Online Marketing

During the economical dot-com bubble burst, Bharat Matrimony was standing firmly against the technological times and was progressing slowly and steadily, whereas other companies were closing down.

Remember the famous dialogue from Band Baaja Baarat, “recession ho ya inflation, shaadi to honi hi hai na aur log lakho kharchte rahenge.” So you can relate.

Only two companies stood against the dot-com bubble burst time; one was the education company and the other one was the Matrimony Company.

Partnership with the other companies

For Muruga, it was a golden opportunity as all the other technology companies were providing Matrimony as an additional division, were closing this part from their website to focus more on the core business.

So grabbing this opportunity, Muruga took advantage of the crisis and he reached out to the companies.

Muruga moved toward Rediff (A news data site) and indicated enthusiasm for getting to be one of their channel accomplices for the matrimonial services that were offered on Rediff. They paid Rediff Rs 1 lakh (~$2200) for this organization.

The results were bright as Rediff was making increased money as the workforce was less and BharatMatrimony was able to direct a tremendous amount of traffic on their website when all the Matrimony profiles were redirecting from Rediff to BharatMatrimony.

What was the next step?

Murugavel chose to approach organizations like Sify, MSN, and Emerson to set up comparable associations.


Numerous sites were associated

Muruga’s objective was focused on making a matrimonial space for various communities. Apart from the matrimonial site, he included areas with services like:

  • Real Estate (Buy and offer property on the web)
  • Astrology (Get week by week and month to month horoscopes)
  • New tabs consisting a broad gathering of South Indian music, books, and recipes.

But his main focus remained on the Matrimonial part.

He changed the overall look and view format of the site alongside the domain name and called it He, at that point, ensured that audience would definitely explore the single destinations ( or to the parent site (

As time passed by more profiles and successful matrimonial bonds were being made through the site. With most of the information was on his side and a solid gut egging him to go up against more he chose to grow.

He chose to enroll other space names like,, despite the fact that there was no indication of these communities becoming on the web at the time as he felt if there was an interest for Tamil and Telugu matrimony then there would be a comparative interest for different communities crosswise over India.

His fantastic vision was to have these communities under one brand name. A stage for all Indians.

He failed to get ‘’ and ‘’ as a domain name but he was not disappointed by that. He took the next available domain name which has become the most popular Matrimonial website; ‘’.

From an SEO point of view, it is invaluable to have one parent area – with committed pages for every community that comes under the parent site.

For e.g.: gave greater expert to the site and furthermore demonstrated ideal in the internet searcher rankings.

To be continued….

The story of Muruga doesn’t end here; in fact, there is a big roller coaster ride here and there and a lot more to look forward. In the next part, we will read about why Happy Marriage was created.

The concept of speed dating and family meeting were also introduced but the main question was, whether the ideas were correctly implemented or not and also the retail outlets were launched.

There was an idea behind this initiative and there were many challenges which Muruga faced while creating Happy Marriage. After facing many challenges Muruga had results in his hands but how were the results? were they good or not so good, we will read this in the next part.

References taken from

Walmart Flipkart Deal

Walmart Flipkart Deal | THE GOOD, THE BAD, & THE UGLY

The Good

Walmart Flipkart Deal

Walmart Flipkart Deal

Going once, going twice, going thrice, SOLD! It is official. Wal-Mart will be acquiring a controlling stake of 77% in FLIPKART for a whopping $16 billion. That values FLIPKART at roughly $21 billion. This is the world’ largest e-commerce deal till date. Off late, poor exits & poor returns have marred the India startup story. This deal is being touted as coming of age for the Indian e-commerce.

The crorepati employees

Walmart Flipkart Deal

Besides one billionaire co-founder who walks away with about a billion dollar, several multi-millionaires would be born out of this deal. Over 100 Flipkart employees might become dollar millionaire after this deal.

The Wal-Mart deal has helped worker investment opportunity designs (ESOPs) of Flipkart to an aggregate of $2 billion or Rs 13,455 crores. This is, in any case, not the first run through Flipkart’s workers are profiting because of the liquidity of investment opportunities.

If we look at esops of all the employees then they are worth over Rs.5000 cr. This is not the first time that the Flipkart’s employees have benefitted by liquefying the stocks. Back in December, Flipkart bought back equity from its employees and had spent a total of $100 million.

This is also termed as the largest buyback of ESOPs by any private company in the country. An approximate of 3000 employees of different brands which are owned by Flipkart have benefitted from the offer.

The Indian ecommerce market

Walmart Flipkart Deal

FLIPKART claims to have sold $7.5 bn worth of Gross Merchandise Value annually. This is over 54mn customers, & 261mn products. That’s roughly 2.2 crore products handled monthly.

As per the Investors presentation shared by Walmart for the deal, they are estimating the retail ecommerce industry to grow by 36%, 4 times vis-à-vis Indian retail industry by 2023.

This will mean that the retail e-commerce will have a share of >6% in the Indian retail market. Indian retail market is expected to be $200 billion market by the year 2026. These are some huge numbers.

What it means for startups


Walmart Flipkart Deal

Flipkart’s founders, Sachin&Binny Bansal have already invested in startups. Electric-scooter maker Ather, artificial intelligence-driven health tech firm Sigtuple and biotech startup Pandorum are such examples.

The best part is that these ventures are unrelated to the venture they made money in. 80% of the ecommerce market is controlled by Amazon & Walmart-Flipkart combined. If someone to say he is launching ecommerce startup, people would laugh at him.

The message is clear – funds have started to flow in startups that are not cab-aggregation, fashion & hospitality. This deal will help Sachin, Binny& hundreds of ESOP holders who will have lots of money at their disposal to invest boldly into business ideas.

We can see super specialization building up. Education & Healthcare would also gain.

Already 200 startups are founded by former Flipkart employees. Over 50 ventures are backed by people who have been associated with Flipkart. This number is going to shoot up big time.

What are the investors doing


Several funds including Sequoia, Accel Partners, Matrix Partners, Nexus Venture, Inventus Capital, &Saama Capital have raised fresh money to back Indian startups.

More than a dozen new India based & focused VCs have setup shop in the past 2 years including Stellaris, IAN fund etc. They had interest in India. Now with this kind of an exit, they would be thinking that they have come here in good time.

The Bad

The ex-employees

About 300 former employees of Flipkart, who held fully vested ESOPs, received an email recently that really shook their core.

The rumours were many, but the email with the subject line: “Liquidity opportunity of vested stock options for ex Flipkart employees” told them this was for real.

The email stated that only 30 percent of their stock options would vest with the company’s 77 percent stake sale to Walmart. There was no reference to the fate of the remaining 70 percent ESOPs.

So would it mean, the remaining 70% were to be liquidated at the time of, say an IPO? This would find hardly any takers. Of course this is unfair to ex-employees.

According to sources, current employees of Flipkart will be able to vest up to 50 percent of their stock options now, 25 percent next year, and the remainder the year after. But the ex-employees have not been treated with the same fur glove.

The stock options are an acknowledgement of exemplary work done & value brought in by the employees. Even if the employees move on, the vested stock options are for them to make use of.

When Flipkart completed a buyback last October, ex-employees could liquidate only 10 percent of their holdings; current employees could liquidate up to 25 percent. The net worth of the shares of ex-employees is currently estimated at $300 million, that is nearly a third of the total ESOPs.

The sale of Flipkart, in the world’s biggest e-commerce acquisition, is a reason to celebrate, a reason to be optimistic about the future of Indian startups. But did the management take a long-term view? Did someone standup for the rights of the ex-employees who contributed to the company?

Is the new management ready to live the culture they will propagate? Current and potential employees will closely observe Walmart’s approach to ESOPs.

ESOPs have real value; they have created real dollar-millionaires. In India however, startup ESOPs often don’t turn out to be the reward they are made out to be? Is this the wake-up call for Indian employees to better read the fine print &realise that ESOPs are high risk? The startups still need takent. Right? How then – is a point to ponder.

Make in India Drive

Walmart Flipkart Deal

What this deal has done is clearly dented the make in India drive. Ideally, local market opportunities should have been lapped up by domestic startups. But with the Indian government moving this slow always, foreign companies will now dominate.

This is excerpt by VivekWadhwa, a distinguished fellow at Harvard Law School’s Labor and Worklife Program. He further adds that the Walmart deal will intensify competition.

The elephants will battle each and this will, in the short term, benefit Indian consumers. However, Indian startups will be trampled in the melee.

Reading between the lines

The US market gave a thumbs down to this deal wherein Walmart shares lost $10 billion market cap in a single day after this announcement was made.

In the investors presentation too, Walmart had indicated an EPS loss of $0.60 but seems that the market estimated it even higher.

Walmart has paid a very hefty premium for gaining what – a 1% stake in the Indian retail market. Many stakeholders seemed confused.

Other Stakeholders

Walmart Flipkart Deal

The way SoftBank has entered India with its $10bn war chest, the smaller investors have already started to worry about their investments. Any backing by SoftBank clearly makes a player a behemoth & ring fences the sector in his favour.

SoftBank hasn’t decided on its 22.6% stake in Flipkart, in very major part, also driven by the fact that the short term capital gains tax would be too huge as they just had picked up the stake.

The sellers are not happy. Walmart is known for taking control of the entire supply chain end to end, and then push the costs down by squeezing out the margins.

The sellers clearly feel cheated as they were never taken into confidence for the deal and they believe that their concerns have not been addressed with this deal.

In an interesting development, eBay, a US ecommerce biggie has announced its plans to re-enter India.

The Ugly

Dominating Entrepreneurship

Walmart Flipkart Deal

Some experts say that this deal will mark a move by foreign companies to dominate entrepreneurship & innovation here.

It is quite possible that entrepreneurs may struggle to break into sectors ring-fenced by behemoths. Like we mentioned above that people would laugh on someone trying to enter ecommerce or I would say, even cab aggregation services. Just too much of foreign money ring fencing the sectors.

Timely bailout?

In 2007, Subhiksha Retail was on sale. Reliance group made an offer to them which they did not accept. Reliance never made a counter offer and we all know what happened to Subhiksha.

The way things were going, it was a lucky exit for the investors. In about 2-3 years, Amazon would have totally dominated the space. The competition pressure is written all over Flipkart. Flipkart has lost about 50% of the total $6 billion plus raised since inception till now.

Some critics also believe that Walmart could have spent $4bn in 3-4 years to come next to Amazon in India instead of spending $16bn on the deal. So are we saying that even after all this noise, the enterprise never added value. It would have died a natural death had it not been bailed out?

The largest Foreign Direct Investment?

Walmart Flipkart Deal

It is being touted as India’s largest FDI or Foreign Direct Investment. The claim has many holes to it. First, the investment is not into India. The asset being sold is a Singapore company & not an Indian company (we will read more about it later).

Second, the cash is not coming to the company but going to the shareholders so it is not direct. It is like, as RaghavBahl, puts it – a secondary market transaction. It is not an investment into the country as no new asset is being created but the existing shareholders are being replaced.

And last but not the least, lion’s share of this amount will not be coming to India. Estimated $13-14 billion will flow out to countries like US, China, South Africa, Japan. India, at best could get only about $2 billion.

The policy conundrum – the workaround& the web of lies!

When Flipkart was launched and they ended up getting their first million in funding, there was only a small regulatory hurdle. Indian laws didn’t allow FDI in online retail. Thus was born a workaround, W S Retail. An offline book seller, commerce without the ‘e’. While Flipkart was labelled a technology platform.

As the investors started queuing up, there were more ‘workarounds’ needed. In 2011, it was thought that it would be best to dump the Indianness and thus was born Flipkart Pvt Ltd in Singapore.

Just think of it – here was this budding asset building up on potential of India’s ecommerce industry but Indian capital could no longer be a part of this story. Remember how we mentioned the big funds ring fence not only the sectors, but the companies as well.

Any Indian resident putting money in Singapore holding company would be penalized by Indian laws here. Ridiculous, but this was happening.

Over the yearsFlipkart came up with 8 entities – 3 in Singapore, 5 in India. All in a pretty complex structure for managing various aspects of business. As ED sniffed something on it, in 2012 half of WS Retail was owned by couple of ex-employees.

The Bansals and their relatives resigned from the board. Technically, the entire setup was still selling 75% offline through WS retail. Can you believe it? The bureaucrats did.

The fight spilled over to the court. It was clear the FDI rules were being circumvented and the traditional trade associations sued the Govt over it. The Court ordered investigation into several e-commerce companies – Flipkart was the main target.

As usually happens, everybody got a clean chit; but the government came up with another workaround called an ‘online marketplace’, which continues to operate even today.

Do you realise that Flipkart and Amazon cannot sell anything directly to you. Do you believe that Amazon and Flipkart are banned from keeping any inventory. Yes, it is true!

Does India really want entrepreneurs?

Mark Zuckerberg, Jack Ma, Jeff Bezos – entrepreneurs from US & China. All have close to half a trillion worth of market cap. The Indian boys got mired in bureaucracy and sold every bit of equity they had. They managed to raise $6bn but ultimately sold off their dream for $21 bn, roughly about 3.5 times of what they raised.

TRAGEDY. Though we may clap for this $21bn, we should never forget it is just a drop in the big ocean of world capital. While the world’s big poster boys are running free to chase their dreams of trillion dollar valuations, see how cheap we, as a country, have sold nearly 40% of our online retail industry. All this while killing aspirations of brightest entrepreneurs.

I just hope that some policy maker sees the disappointment in the whole euphoria and does something about it.

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