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WAL-MART purchases India India Alibaba retail market shuffle

via:博客园     time:2018/8/10 12:43:56     readed:352

Le Yan Miu Qi

In protest at the retail giant Wal-Mart's acquisition of India's largest e-commerce platform, the All-India Business Federation (CAIT) said it would hold sit-ins in major cities across the country to shout at the government. But on the day of the July rally, fewer than 100 protestors actually appeared at the sit-in in New Delhi, the capital.

This also reflects the status of the retail market in India: it is difficult to resist the strong enemy.

In May, Wal-Mart announced that it would buy 77% of Flipkart, India's largest e-commerce site, for $16 billion (about 109 billion yuan), the largest acquisition in the history of e-commerce in India. On August 8, the Indian Competition Commission (CCI) announced on Twitter that it had approved it. Wal-Mart's acquisition of Flipkart, which means Wal-Mart is in India's e-commerce market


First Financial Reporter contacted Wal-Mart on August 9, saying:

Wal-Mart said Flipkart is an outstanding Indian company with a strong and entrepreneurial leadership team that fits well with Wal-Mart 's culture.

It is worth mentioning that the success of Wal-Mart's acquisition is inseparable from the support of Japan Softbank Group. Softbank has been holding a Flipkart stake of about 20%, and is a major shareholder. Earlier, Softbank was reluctant to transfer control to Wal-Mart, but eventually changed its mind.

The first financial reporter interviewed Wal-Mart and learned that although local policies in India are very strict with foreign retailers like Wal-Mart, Wal-Mart has been looking for opportunities for development over the past decade. Wal-Mart currently owns and operates 21 B2B full-channel modern wholesale and retail outlets in India, called Best Price ModernWholesale, which covers nine Indian states (similar to China's provincial administrative divisions), the first of which was opened in 2009.

Wal-Mart India opened its first e-commerce operation centre in Mumbai in November 2017 and its second e-commerce operation centre in July 2018 as part of its business development plan and to better serve its members. This format mainly develops B2B wholesale business, basically does not involve C-end retail, but also to the local development of Wal-Mart has laid the foundation.

Industry analysis believes that through the acquisition of Flipkart, Wal-Mart equivalent to curve into India's local C-end retail market, the future can play its strengths, in the retail side of the big fight. At the same time, the move also shows WAL-MART's contention with Amazon and other providers.

Wal-Mart has been sitting still for years

To make up for the shortcomings, Wal-Mart has been working hard on e-commerce to develop e-commerce through self-construction and capital operation to cope with competition and expand retail channels.

Take the investment in China as an example. At first, Wal-Mart's e-commerce business did not develop smoothly. In China, Wal-Mart set up an e-commerce board and an independent e-commerce platform for Sam's affiliate stores. However, the results were very little, especially the e-commerce board business was difficult to improve.

As a result, Walmart changed its strategy decisively and bought the e-commerce platform

On August 9, Wal-Mart announced an increase of about $320 million ($2.2 billion) in investment from Dada to Jingdong. Wal-Mart made a $50 million investment in Dada-Jingdong in October 2016. The new investment is an extension of the bilateral business cooperation agreement and will further strengthen Wal-Mart's full-channel service in China.

Doug McMillon, Wal-Mart's president and chief executive, said in an exclusive interview with First Financial Reporter:

India peddlers sit in protest

Unlike China, where e-commerce is booming, people who know a little about the Indian market know it's hard to do business in India.

Indian vendors are 10,000 in disgust at Wal-Mart's acquisition of 77% of Flipkart with government approval.

Earlier, when Wal-Mart announced it was buying Flipkart, CAIT organized a sit-in rally of local vendors in major cities across the country to shout against the government.

According to CAIT, they represent the aspirations and interests of more than 60 million local vendors, who are all over the streets of India worried that the biggest U.S. retail chain that swallowed India's electronics companies would quickly dominate the local retail market, forcing retail prices to fall and eventually leaving street stores empty. People can only close their doors if they ask questions.

However, on the day of the July rally, fewer than 100 protestors actually appeared at the sit-in in New Delhi, the capital.

They hold up

The worries of small traders in India are not unfounded. In fact, in India's ecommerce world, Flipkart and its main competitors

One of the reasons CCI approved the acquisition was that it hoped the cooperation between Wal-Mart and Flipkart could check Amazon's rapid expansion in the Indian market.

The huge consumer market in India's rapid rise has long been coveted by the retail giants. At the same time, India will become the world's fastest growing e-commerce country, with online retail sales of more than $100 billion by 2020.

Wal-Mart has been working hard to establish a large-scale retail outlet in India for more than 10 years, but it has not broken through because of the restrictions imposed by the Indian government on foreign retail investment.

For example, the IKEA home in Sweden. In 2006, IKEA first opened a store in India, but after three years of frustration, IKEA abandoned the plan. IKEA, which reopened its store plans a few years ago, finally opened its first physical store in Hyderabad, India, this summer because of loose policy.

India still has restrictions on multi-brand cross-border retailing. So far, Wal-Mart has only been able to participate in retail operations in India through a small number of wholesale channels. The acquisition of Flipkart will open up Wal-Mart 's entry into the Indian retail market.

However, WAL-MART's entry is undoubtedly good for consumers in India.

Yan Xie, who has worked and lived in India for many years, told First Financial Reporter that the development of e-commerce in India in the past two years has been very rapid. She often buys daily necessities on online platforms such as Amazon and can deliver them home in almost two days. And WAL-MART's entry will make shopping in India more convenient and affordable.

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