Early this year, there were talks about Walmart collaborating with Flipkart, Snapdeal, BigBasket and others to enter the Indian ecommerce market. Looks like it may not happen as latest reports suggest that the American retailer is looking to enter directly.
Plans to sell directly to Indian consumers
Walmart is a strong player in the Indian B2B retail segment and has several wholesale stores across India. The firm is now exploring the option of selling food products directly through offline and online stores in the country.
“The business of brick-and-mortar food retail stores and online sale of food products is of interest to us, but we have to evaluate the policy guidelines once they are notified,” confirmed Walmart India’s Chief Executive Krish Iyer.
FDI, the saviour
The change of strategy is quite possibly due to the government’s decision to allow 100% FDI in food marketing. The upgraded ecommerce rules and regulations have now enabled the company to function independently instead of tying up with a national firm.
“Never in the Budget has the government taken so much interest in retail, and it is encouraging. 100% FDI in food marketing is a progressive step. 100% FDI in food marketing will provide better realisation to farmers and bring down prices of essential commodities.”
The growing food & grocery segment
India’s online food and grocery industry is going through a sea change. Just a week back Gurgaon-based e-grocer PepperTap closed down.
In spite of the several challenges and changes, it remains one of the fastest growing segments. It is growing at a CAGR (compounded annual growth rate) of 62%. Retail giant Walmart wants to cash in on that. But will it succeed in a complex market like India, that too without a regional partner?
Retail consultancy Third Eyesight’s Devangshu Dutta feels,
“Retail is a local business and it won’t work without local leadership or by following global template. But given Walmart’s history, they would want to enter retailing alone as it will give them confidence on the expansion strategy as well as proper control. Even if FDI is allowed completely, the caveats or riders will mostly support local business.”
Will Walmart successfully manage to localize its strategies? And how will Indian online grocery leader BigBasket handle Walmart’s entry? Especially, when the etailer is under FDI scanner.