Walmart's acquisition of Flipkart will help the US retail giant to play a formidable role in India's ecommerce market by strengthening customer-focused hybrid model.
Walmart Chief Executive Doug McMillon on Thursday made it clear that the company will invest in both offline business and improve Flipkart's infrastructure in India to give a unique shopping experience to online buyers.
The US retail giant's decision to retain Binny Bansal, one of the co-founders of Flipkart and the current CEO Kalyan Krishnamurthy has sent positive signal to Flipkart's employees.
According to analysts tracking the sector, Flipkart is looking at an opportunity to expand customer experience and further strengthen its supply chain and seller ecosystem along with Walmart's private labels and cheap products to take on Amazon.
"Even though Walmart has experience in online space after the acquisition of Jet.com in the US, the company's well-oiled strategy of supply relationships, logistics, and product assortment will help in its India gameplan," said Chief Executive of advisory services firm GrowthEnabler Rajeev Banduni.
The customers in India are looking at Walmart for a better shopping experience in groceries, which will help the company to bring in next millions in Tier-2 and Tier-3 cities. Flipkart's efficiency of the supply chain for consumables and perishables are not robust, he said.
The company will also look at replicating its American model of engaging its sellers by making bulk purchases in India. This was indicated by the CEO Kalyan Krishnamurthy in a letter sent to its sellers.
Ecommerce analysts find that Walmart's practice of collaboration with sellers by sharing sales related data on each geography, forecasting and warehousing practices will immensely benefit its seller partners.
But, how Walmart will take on the challenge of serving a customer base who are looking at high discounting along with freebies? "Indian ecommerce already witnessed cash burn of around $15 billion. If Walmart is ready to burn further it will succeed in acquiring and retaining a value-seeking Indian consumer," said Banduni.
Even though Walmart is not facing impact of Amazon Prime customers in India, Flipkart will have a formidable task to take on tech ecosystem built by Amazon spanning home automation and Prime Video subscription.
