What will be Walmart's future strategy in India?

Summary

Walmart CEO Doug McMillon emphasized the company's focus on Flipkart and PhonePe during a recent visit to India, where he also met with Prime Minister Modi to discuss logistics and supply chains. Walmart acquired a 77% stake in Flipkart in 2018 for $16 billion, and Flipkart has since outpaced Amazon in India's e-commerce market. McMillon also highlighted Walmart's goal of $10 billion in exports from India by 2027. Challenges for Walmart in India include regulatory hurdles, competition from Reliance and Tata, and connecting more directly with Indian consumers.

Takeaways

• 📱 Walmart's focus in India is on Flipkart and PhonePe, according to CEO Doug MacMillan.
• 🇮🇳 MacMillan recently met with Prime Minister Narendra Modi to discuss logistics, supply chains, and India's potential as a global export leader in toys and seafood.
• 💰 Walmart's acquisition of a 77% stake in Flipkart for $16 billion in 2018 was the most expensive e-commerce deal in history.
• 📈 Flipkart's valuation reached $38 billion in 2021, with its market share growing to 48% in 2022, surpassing Amazon's 26% share.
• 🛒 Flipkart has been growing faster than Amazon in India, with 40% year-on-year growth in 2021 and 23% in 2022.
• 📊 Walmart also owns a 77% share in PhonePe, which is valued at $12 billion and is India's most valuable unlisted fintech startup.
• 🏢 PhonePe relocated its headquarters from Singapore to India in 2022 and is planning for an India listing.
• 🛠 Walmart is working to achieve $10 billion in annual exports from India by 2027, with a current export figure of $3 billion.
• ⚖️ Walmart faces regulatory challenges and competition from Indian giants like Reliance and Tata in the retail space.
• 🏗 Walmart is focusing on sustainable growth and supporting SMEs through initiatives like Flipkart Samarth, while navigating issues like labor productivity and quality control in India.

Q & A

What is Walmart's current focus in India according to CEO Doug MacMillan?

Walmart's focus in India is on Flipkart, PhonePe, sourcing from India, and technology. They are aiming to enhance e-commerce through Flipkart, expand financial services via PhonePe, and increase exports from India.

How much did Walmart pay to acquire its stake in Flipkart, and when did this happen?

Walmart paid $16 billion in 2018 to acquire a 77% stake in Flipkart, marking the most expensive e-commerce deal in history.

What is Flipkart's market position in India, and how does it compare to Amazon?

As of 2022, Flipkart held a 48% market share in India, while Amazon held 26%. Flipkart has been growing faster than Amazon, with 40% year-on-year growth in 2021 compared to Amazon's 26%.

What are Walmart's export goals from India, and how much have they achieved so far?

Walmart aims to achieve $10 billion in exports per year from India by 2027. Currently, the figure stands at around $3 billion.

What challenges has Walmart faced in the Indian market before acquiring Flipkart?

Before acquiring Flipkart, Walmart faced challenges such as ambiguous regulations, corporate rivalry, the exit of its India CEO in 2013, and the dissolution of its joint venture with Bharti Enterprises.

What are the key challenges Walmart is facing in India moving forward?

Walmart faces challenges in India such as regulatory hurdles, competition from Reliance and Tata, labor productivity issues, and aligning with sustainable growth while dealing with profit-focused SMEs.

How is Walmart using India as part of its global strategy?

Walmart is using India as a sourcing base for global exports and leveraging Indian technology to support its operations. They are also focused on growing their e-commerce presence in India through Flipkart and financial services through PhonePe.

What is the significance of PhonePe for Walmart in India?

PhonePe is a crucial part of Walmart's strategy in India, with a 77% ownership stake. It is the highest-valued unlisted fintech startup in India, with a $12 billion valuation, and plans to list in India soon.

What role do SMEs play in Walmart’s strategy in India?

Walmart is working on empowering SMEs in India through initiatives like Flipkart Samarth, supporting local artisans and entrepreneurs to build a sustainable ecosystem.

How does Walmart's sustainability focus conflict with local business practices in India?

Walmart's emphasis on sustainable growth and the triple bottom line (people, planet, profit) may conflict with SMEs in India, which are often more focused on short-term profit rather than long-term sustainability.

Outlines

00:00

📈 Walmart's Strategy in India

Walmart CEO Doug MacMillan emphasized the company's focus on Flipkart and PhonePe during a discussion about Walmart's business goals in India. After meeting with Prime Minister Modi, they discussed enhancing logistics, skill development, and supply chains to position India as a global export leader. Walmart made history with its $16 billion acquisition of a 77% stake in Flipkart in 2018, strengthening its presence in the world’s most populous country. Flipkart's valuation reached $38 billion by 2021, growing faster than Amazon in India. PhonePe, another Walmart-owned entity, is valued at $12 billion, with plans for a local listing.

05:01

⚖️ Walmart's Past Challenges in India

Before acquiring Flipkart, Walmart faced difficulties entering the Indian market due to regulatory ambiguity and competition. This included the exit of its India CEO in 2013 and the dissolution of its joint venture with Bharti Enterprises. Despite these setbacks, the Flipkart deal provided stability. However, experts argue that Walmart’s lack of direct connection with Indian consumers has hindered its success. Walmart’s cash-and-carry model through EasyDay served small retailers, but it did not build a direct consumer relationship. Now, Walmart aims to achieve $10 billion in exports from India by 2027, currently at $3 billion.

🏆 Walmart's Future Focus Areas

Walmart is now concentrating on four key areas in India: Flipkart, PhonePe, sourcing products, and leveraging technology. With Flipkart as their largest e-commerce partner in India, the company also uses India as a global sourcing base for its products and as a technological powerhouse. MacMillan reiterated the company's commitment to reaching $10 billion in annual exports from India by 2027. Walmart is also developing a system to empower SMEs through financial services and technology while supporting small artisans through initiatives like Flipkart Samarth.

🌍 Walmart's Challenges in India

Walmart faces several challenges in India, including aligning its sustainable growth focus with profit-driven SMEs. Additionally, improving labor productivity and maintaining high quality are critical. The biggest hurdle is India’s regulatory environment, which is subject to pressure from the local retail lobby, especially near elections. Walmart also contends with fierce competition from Indian giants like Reliance and Tata, which have a strong presence in both e-commerce and brick-and-mortar retail. Experts suggest that Walmart must think quickly and strategically to strengthen its connection with Indian consumers.

Keywords

💡Flipkart

Flipkart is an Indian e-commerce company, acquired by Walmart in 2018 for $16 billion, marking Walmart’s most expensive e-commerce deal. In the video, Flipkart represents Walmart's primary vehicle for entering the Indian retail market and competing against Amazon. Flipkart’s growing market share is crucial to Walmart’s strategy in India.

💡PhonePe

PhonePe is a digital payment service provider in India and is the highest-valued unlisted fintech startup in the country. Walmart owns a 77% share of PhonePe. The video highlights PhonePe’s upcoming India listing and its role in Walmart’s Indian strategy, alongside Flipkart, to boost their presence in e-commerce and fintech.

💡Walmart

Walmart is a global retail giant that entered the Indian market through its acquisition of Flipkart. The video focuses on Walmart’s shift in strategy in India, from brick-and-mortar stores to a focus on e-commerce through Flipkart and digital payments via PhonePe. Walmart's goal of increasing exports from India to $10 billion by 2027 also demonstrates its long-term commitment.

💡E-commerce

E-commerce, or electronic commerce, refers to buying and selling goods online. In this context, Flipkart represents Walmart’s primary e-commerce platform in India, competing with Amazon. Walmart’s acquisition of Flipkart is seen as a crucial move to maximize its e-commerce opportunities in one of the world’s largest and most competitive markets.

💡Amazon

Amazon is a key competitor to Flipkart in the Indian e-commerce market. The video shows how Flipkart has been growing faster than Amazon, with a larger market share (48% vs. 26% in 2022). This competition is a central element in understanding Walmart's strategy in India, where it is using Flipkart to outpace Amazon’s growth.

💡Logistics

Logistics refers to the management of how resources are acquired, stored, and transported. The video mentions Walmart’s discussions with Indian leaders about strengthening logistics and supply chains, which is key to enabling Walmart to enhance its operations and make India a global export leader in various sectors, such as toys and seafood.

💡Exports

Exports refer to goods sold and shipped to foreign countries. Walmart aims to increase its exports from India to $10 billion per year by 2027, up from the current $3 billion. This focus on exports reflects Walmart's strategy to use India as a sourcing base for its global operations, leveraging local SMEs and artisans.

💡SMEs (Small and Medium Enterprises)

SMEs are small and medium-sized businesses. In the video, Walmart's efforts to empower SMEs through initiatives like Flipkart Samarth are highlighted. These businesses are essential to Walmart’s strategy of sourcing locally, promoting sustainable growth, and integrating SMEs into its supply chain.

💡Regulatory Challenges

Regulatory challenges refer to the legal and bureaucratic barriers businesses face in a market. For Walmart, these include India’s complex regulatory framework and political pressures, especially from the small trader lobby. These challenges complicate Walmart's ability to expand and compete in India, which is seen as a significant hurdle for its growth.

💡Reliance and Tata

Reliance and Tata are two of India’s largest conglomerates and key competitors to Walmart in both e-commerce and brick-and-mortar retail. The video points out that these companies have a strong 'pan-India play' in various sectors, making them formidable opponents as Walmart tries to increase its market presence through Flipkart and PhonePe.

Highlights

Walmart's main focus in India is on Flipkart and PhonePe, as mentioned by CEO Doug McMillon.

Walmart's $16 billion acquisition of a 77% stake in Flipkart in 2018 was the most expensive e-commerce deal in history.

Flipkart's market share in 2022 was 48%, compared to Amazon's 26%.

Flipkart's gross sales grew 40% in 2021 and 23% in 2022, while Amazon's growth was slower at 26% and 10%, respectively.

PhonePe, an Indian payment service provider, is the highest-valued unlisted fintech startup in India, valued at $12 billion.

Walmart plans to achieve $10 billion in exports from India annually by 2027, compared to the current $3 billion.

Walmart is focusing on four main areas in India: Flipkart, PhonePe, sourcing from India, and technology development.

Walmart uses India as both a sourcing base and a hub for powering its technology advancements.

Walmart is committed to empowering small and medium-sized enterprises (SMEs) and artists through initiatives like Flipkart Samarth.

Walmart is committed to sustainable growth and follows a triple bottom line approach: people, planet, and profit.

One of Walmart's challenges in India is adapting to local competition, especially from giants like Reliance and Tata.

Walmart faces regulatory challenges in India, particularly with the pressure from small trader lobbies.

Walmart had a rocky start in India, with difficulties in connecting with Indian consumers.

Walmart plans to continue leveraging Flipkart and PhonePe to expand its presence in the Indian market.

Labor productivity and quality consciousness are challenges for Walmart in India, despite cheaper labor costs.

Transcripts

what really excites us are Flipkart and

phone pay and that's our Focus this is

what Walmart chief executive Doug

MacMillan had to say when asked if

Walmart still has the aspiration to be a

multi-brand retail player in India

MacMillan also met prime minister

Narendra Modi recently and discussed

issues such as strengthening Logistics

skill development and Supply chains to

make India a global export leader in

toys seafood and other Goods

Walmart struck the most expensive

e-commerce deal in history to break into

the Indian market in 2018

paying 16 billion dollars for a 77

percent stake in Flipkart an online

retailer founded by former Amazon

employees in the world's most populous

country

flipkart's valuation swelled to 38

billion dollars in 2021 after it raised

another 4.8 billion dollar in equity

flipkart's market share was 48 in 2022

and Amazon was 26 during the same period

according to research firm redsears

strategy the figures also suggest

Flipkart has been growing faster than

Amazon in India redsear calculates

flipkart's gross sales went up 40 year

on year in 2021 and 23 percent in 2022

the comparable figures for Amazon were

26 percent and 10 percent it said in his

recent trip to India MacMillan had also

declared that phone pay is set to opt

for an India listing too Walmart owns 77

share in the company

at a 12 billion dollar valuation the

Indian payment service provider phone

pay is India's highest valued unlisted

fintech startup it finished moving its

headquarters to India from Singapore

recently in November 2022 but before

acquisition of Flipkart in 2018 Walmart

had to face challenges trying to

replicate its Global successes in the

Indian market ambiguous regulations and

corporate rivalry the exit of its India

CEO Rajan in 2013 and the dissolution of

its Cash and Carry joint venture with

bharti Enterprises

the retail giant had a rough patch in

the country its Flipkart deal finally

brought in some stability to its India

prospects experts believe this Rocky

start has hindered Walmart's connect

with the Indian consumer

they don't really have much of a

customer resonance I think Walmart they

never had the opportunity to directly

properly

their first foray was really through a

cash and Academy model which was called

easy day right so easy day was the

interface where small retailers could

buy from the cash and carry Walmart is

gay and it turns sell it to any

consumers so there's no direct interface

in macmillan's words Walmart is now

focused on achieving 10 billion dollar

worth of exports per year from India by

2027. currently the figure stands at

around 3 billion dollars he also pointed

at four Focus areas for Walmart in India

Flipkart phone pay sourcing from India

and technology so what could the retail

Giants likely India strategy be going

forward I think since 2018 when they

acquired Flipkart so now their entire

focus is how do they maximize the

e-commerce opportunity to Flipkart they

are their largest partner or they have

their India partner and they all also

using India for two things one is as a

sourcing base Walmart globally and two

is to power their deep technology in

with their recent minute with our

nation's leadership the CEO of Mr

MacMillan has emphasized on 10 billion

U.S dollars exports from India overseas

through Walmart that is a big number and

they have committed this to achieve by

2027. they are working towards entire

ecosystem Financial Services travel

technology SME empowering through

Walmart

they are doing this a semi uh ecosystem

and a Flipkart samarth they are

emphasizing on this Cottage type of

artists and uh Shilpa cars they are

supporting them and what are the major

headwinds it will face

one of the big challenges is Walmart is

a ESD inclined organization means they

are working on sustainable growth and

they believe on Triple bottom line

people and then profit

our small medium Enterprises are profit

focused so to change the mindset

it takes a time so that is challenging

number two is the uh quality

Consciousness and then the productivity

of Labor is also important labor rates

are cheaper but the productivity needs

to commit power or better than our

neighboring countries the single biggest

challenge for Walmart in India is really

regulatory headbands uh India as a

market is always prone to pressure from

small Trader Lobby or the retail Trader

Lobby and specifically as one gets

closer to a general elections I think

they're able to put a lot of pressure on

local Representatives so I think the

regulatory framework is always going to

be one big issue the second Big

Challenge I think for Walmart is really

about the tough Indian competitive

situation the giant like Reliance and to

an extent

both lions and tatas have kind of

pan-india play on various aspects of

retail whether it is e-commerce whether

it is on-ground retail brick and mortar

and both these are very very first

competitors Walmart's India business is

centered on a clearly thought out

strategy however experts believe it

needs to think on its feet and

strategize better in terms of countering

the competition it may face from giants

like Reliance and Tata most importantly

through Flipkart and phone pay Walmart

should establish the connection between

its core brand and the Indian consumer

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