By Vidit Garg
The Indian online and offline commerce stage is all set to witness a mega showdown very soon. The US-based giant retail chain, Walmart, is in talks with Flipkart to open a chain of retail stores in the Indian subcontinent. The reports have surfaced as per a view of an investment banker familiar with the developments. Walmart is negotiating a 30% stake in one of India’s biggest online e-commerce company in furtherance of its strategy to have a competitive advantage against its archrival, Amazon.
Flipkart had been searching for the right partner to expand into the offline retail store channel since long. The time and the partner seem to be opportune now. Recently Flipkart was poised to buy retail chains such as Vishal mega mart from TPG group and Shriram group. Various industry experts are seeing the possible coalition as a strong hegemony of resources wherein Flipkart will gain on the offline retail business front and Walmart on the grocery and consumer goods business front.
Beating cultural sensitivity for success
For an international company to be successful in India requires an in-depth understanding of the mindset and psychology of the Indian consumer. Also, the kind of regulatory environment and the government rules and policies need to be intricately studied. Walmart would have had to learn the rules of the game had it ventured alone in the Indian market. But its decision both from strategic and resource point of view to partner with Flipkart seems to be perfect at the moment.
First mover advantage
While Amazon is trying to ramp up its offline presence in India, it is still behind schedule. The Walmart Flipkart deal might be a big challenge to Amazon’s efforts as the coalition will bring in synergies and core competencies of both the companies. Walmart is the undisputed leader in the grocery delivery, and low-cost apparels domains and Flipkart has a good presence in the online commerce segment. The new entity can thus enjoy the powers of both the worlds. This deal will help Walmart make a pompous entry on the Indian shores.
How Flipkart is Walmart’s ‘perfect partner’
The deal with Flipkart will not only help Walmart take over Amazon in its global fight for supremacy but will also take Walmart towards its dream of playing in the large untapped offline retail sector of the Indian economy. Walmart will get the ability and power to sell directly to Indian consumers rather than just running a commercial entity it has been in till now. Walmart has added the advantage of the prior experience of having operated in a similar domain along with expertise in raw material sourcing, location of stores, store layouts, goods merchandising and efficient checkouts systems. These will come in handy while serving the large population of India.
On the other hand, Flipkart will not only gain financial resources but strengthen its supply chain thereby further enhancing its efficiencies in procurement and product assortments.
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