A day after announcing $16 billion investment in India’s largest online retailer Flipkart, Walmart Inc today said it will continue to grow its wholesale cash-and-carry business. “We currently have 21 stores and plan to open 50 more in four to five years. Plans are on track,” Walmart India President and CEO Krish Iyer said at a select media roundtable called to explain the Flipkart deal.
The company's Chief Executive Doug McMillon said Flipkart, in which the US retailer is acquiring 77 per cent stake, would continue to operate as a separate board-managed company, with co-founder Binny Bansal as the CEO.
Flipkart gives Walmart an online presence. So far it had been handicapped by India’s retail policy that does not allow overseas companies to sell directly to consumers (except in wholesale cash-and-carry segment). Companies like Flipkart and Amazon operate as e-commerce marketplaces — a segment where 100 per cent foreign direct investment (FDI) is allowed.
“As we speak, we have a pipeline of 20 stores and we expect to open five stores in the current year and eventually start opening 12-15 stores a year,” Iyer said.
For the cash-and-carry business, Walmart currently operates in nine states and 19 cities. The future expansion is focused on more or less the same geographies. “We are not spreading thin. We are continuing in same geographies but primarily, the focus is on Punjab, Haryana, Uttar Pradesh, Uttrakhand, Maharashtra, Andhra Pradesh and Telangana,” he said.
At its 21 Best Price wholesale stores, Walmart sells everything from fast-moving consumer goods to furniture to other retailers and institutions. It could potentially use these stores as pickup and delivery points to service online sales made on Flipkart.
Analysts say
Analysts believe that Walmart’s investment in Flipkart, whose 34 per cent market share in India’s online sales is ahead of rival Amazon’s 27 per cent, will boost the Indian e-commerce company’s logistical operations and help it move into new areas such as groceries.
Walmart is buying 77 per cent of Flipkart from existing shareholders, including Japan’s SoftBank, for $14 billion and investing $2 billion of fresh equity.
Walmart India is a wholly-owned subsidiary of Walmart Stores Inc and offers close to 5,000 items through its cash-and-carry wholesale format.