The logo of Flipkart is seen on the company's office in Bengaluru. Photo: Reuters
With the Competition Commission of India (CCI) giving its nod to Walmart acquiring 77 per cent stake in Flipkart for $16 billion, the ball for collaborations between the US retail giant and the country's largest e-commerce player has begun rolling.
Prior to the announcement of the deal, which happened in May, both companies
had extensive discussions on how they could leverage each other's strengths. Several people Business Standard spoke to suggested that Walmart's investment in Flipkart isn't only about growing in India but also to leverage it to start winning in online retail across the globe.
"Apart from obvious long-term commitment and access to capital, I think what will be most beneficial for us will be Walmart's strength in sourcing and omni-channel. They are the global leaders in this space and can help us a lot here," said a top executive of one of Flipkart's subsidiaries.
But it's going to be a two-way street. When it announced the deal, Walmart had already said that Flipkart's technology and understanding of online retail would be invaluable to it. The company has struggled to keep pace with rival Amazon in the US and Europe. After conquering the online market, Amazon has now started experimenting in Walmart's traditional offline space.
Digital payments could be one of the first pieces that Walmart could leverage for its global operations. The company has thoroughly lacked any play in this space and would want a partner that understands transactions at scale, which PhonePe, the payments subsidiary of Flipkart, has cracked very well in India.
While PhonePe has said that it isn't planning to go global anytime soon, the scope for sharing of technologies and knowledge will depend on how quickly Walmart can integrate Flipkart and its subsidiaries. In a call with investors post the announcement of the investment in Flipkart, Walmart's executive team had expressed great excitement for learning about the payment's piece from PhonePe.
Fashion is the other big piece that Walmart could be interested in. The category makes up a small percentage of the US giant's sales globally and it could leverage the trio of Flipkart, Myntra and Jabong to grow here. India is already a big manufacturer of textiles and fashion and Flipkart has already partnered with several brands, both local and global, to sell their products on its platform.
"We'd love to take our private fashion labels to Walmart's stores across the globe. Maybe starting with regions that have a high presence of Indian diaspora. These discussions will happen in the future and we'd want to leverage their huge size to grow our own business," said a Myntra executive.
From Walmart's end, raw material sourcing and the introduction of private labels (especially in grocery) could be game changers for Flipkart. A team of Walmart executives will also travel to India to learn about the market and at the same time help Flipkart tackle problems of getting into new categories while improving efficiencies in existing categories.
Hours before announcing the deal on May 9, Doug McMillon, CEO of Walmart, spent an hour with each of the leaders of the Flipkart Group companies.
Apart from lauding them for building businesses that were scaling so rapidly, he said he wanted to learn a lot from them.
"We want to get the learnings from Flipkart and take it to other parts of the world," McMillion had told Walmart investors post the announcement of the deal.