What will be Walmart's future strategy in India?
Summary
TLDRWalmart 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
📈 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.
⚖️ 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.
Mindmap
Keywords
💡Flipkart
💡PhonePe
💡Walmart
💡E-commerce
💡Amazon
💡Logistics
💡Exports
💡SMEs (Small and Medium Enterprises)
💡Regulatory Challenges
💡Reliance and Tata
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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