Walmart exploring e-com companies in India

18 Jan '16

3 min read

American retail major Walmart is learnt to be exploring ways to tie up with leading Indian e-commerce companies such as Flipkart, Snapdeal, ShopClues, Grofers and Bigbasket to tap the growing online retail opportunity eight years after it entered the country.

Walmart India Vice-President and Head, Corporate Affairs, Rajneesh Kumar said several e-commerce players have approached the retail giant to become its members. Those requests are under process, according to media reports.

The $486-billion retail chain refers to companies and businesses which buy its products as "members". No foreign multi-brand retail chain has entered into tie ups with e-commerce companies in India till now.

With on-line giving intense competition to the traditional retail companies, even big groups like Tatas and Reliance Industries are planning big in e-commerce. This is why despite FDI not being allowed in e-commerce, most big players (with foreign money coming from marquee investors) operate through the marketplace model. While the Indian government has not been explicit on rules for online marketplace, Goldman Sachs has projected that Indian e-commerce will be a $100-billion market by 2020, from a single-digit figure now.

According to the reports, e-commerce companies, including Flipkart, Snapdeal and Grofers, did not comment on whether Walmart was talking to them for potential partnership. The news comes at a time when the $90-billion American e-commerce giant, Amazon is giving competition to the Indian start-ups. In a recent interview, Amazon India head Amit Agarwal had told Business Standard investment would never be a hurdle for India operations. Walmart and Amazon compete with each other globally, especially in the US, in the online space.

Although Walmart, the world's top retail chain, had signed up a joint venture with Sunil Bharti-led Bharti group in 2007, with the intention to enter the fast-growing front-end retail space, it has remained limited to just business-to-business (B2B) operation in the country, both in brick and mortar, and online. It currently sells to businesses, organisations and educational institutes, but not to individual buyers.

Walmart India's revenue was down 32 per cent to Rs 2,992.7 crore in the year ended December 2014, according to figures available with Registrar of Companies. This was mainly due to no new stores opening through 2013 and 2014. The company's loss was at Rs 232 crore in the same period. It is said to be looking at various opportunities to shore up its revenues, including laying greater emphasis, in private label business. According to reports, Walmart expects 25 per cent of its revenue to come from private labels in about two years. In countries such as the US and UK, private label makes up for a significant chunk of its revenue. (SH)

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