According to The Economic Times, right after US retail giant picked up a 77% stake in India’s largest online retailer Flipkart for $16 billion, concerns have been raised over how the American retail behemoth would impact India. Very few Indians know how Walmart operates in its home market and how it’s perceived there. If you ask the man who has closely tracked Walmart in the US for more than a decade, Walmart is an unbeatable force.
“You don’t ever ‘win’ in a competition with Walmart. You may survive, but as a competitor, and as a supplier, you’ll always have to keep changing and innovating, because Walmart will come after your customers, and Walmart will come after your profit margins—because Walmart never gives up,” said American journalist Charles Fishman. In 2006, Fishman wrote a bestseller, ‘The Walmart Effect—How the World’s Most Powerful Company Really Works’ that described in staggering detail the operations of the retail giant.
But there are varying opinions. According to Gurcharan Das, author and columnist, “They have been working in India in the last 2-5 years selling wholesale to retailers & they are going to use those retail spots for last-mile delivery. The biggest beneficiary is the farmer because the reason Walmart can dare to take on Amazon is because Walmart has something that Amazon doesn’t & that is the ability to take fresh farm produce through very sophistically developed cold chains”.
Walmart will likely step up sourcing from India for its global operations too as the Flipkart acquisition gives it access to the huge supplier base of the ecommerce company. Walmart currently sources goods worth over a “couple of billion” dollars, such as apparel, generic medicines and handicrafts, from Indian suppliers such as Welspun and Dr Reddy’s for its stores in the US, UK, Canada and South America. Walmart’s sourcing from India is still small compared with that from China.
Online sellers are jittery about Walmart’s entry into e-commerce. They fear that Walmart might bring in its own private labels via Flipkart to the Indian consumers, adding to competitive pressures. “These products would be brought in at hyper-competitive prices, which will cannibalise the market and make it difficult for other sellers to operate. We are studying the situation and will take appropriate action, including the legal route, if necessary,” a spokesperson of the All India Online Vendors’ Association (AIOVA), which has 3,500 sellers on large platforms like Flipkart and Amazon, told ET.