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Walmart India Ups Its Game In Wholesale With Second Fulfilment Centre

Walmart India Ups Its Game In Wholesale With Second Fulfilment Centre

After Mumbai, Walmart has opened its second fulfilment centre in UP

Walmart is aggressively expanding its wholesale store business in India after efforts to focus on compliance with US anti-bribery laws

With Flipkart acquistion, Walmart is looking to battle straight with its arch-rival Amazon in India

Walmart India opened its second fulfilment centre in Lucknow on Monday with an aim to pace up its wholesale operations in the country.  The first such store opened in Mumbai in November 2017.

Wholesale here implies that these stores are only for stakeholders such as hotels, registered resellers and kirana store owners among others who want to buy goods in bulk and for cheap.

The fulfilment centre is a new format of Walmart’s best price cash-and-carry store model that will focus exclusively on FMCG products and staples and will not stock fresh food or electronics.

As Krish Iyer, CEO of Walmart India explained in an earlier media interaction, “While a full-fledged cash-and-carry store will take us about two-and-a-half years to open, the fulfilment centre in Mumbai came up within 60 days of us signing the agreement for the land.”

Thus, we can say the Walmart India’s fulfilment centres to be mini cash and carry stores with a limited range of products.

The Lucknow fulfilment centre will directly deliver grocery and general merchandise to Walmart India’s wholesale clients through ecommerce and other channels.

“We will open one more such fulfilment centre and study it before expanding them,” said Iyer

At present, Walmart has 21 full-fledged best price cash and carry stores in India. As Iyer said, the company further intends to double this number by 2020.

Walmart India: How The Change In Strategies Lead To Success?

Walmart has seen some tough times during the period between 2011 – 2017 wherein the company was forced to freeze its India expansion plans.

It all started in 2007. As per FDI regulations, the Indian government does not allow foreign retailers like Walmart to operate into multi-brand segment and open front-end stores in the country on their own.

Therefore, Walmart entered into a joint venture with telecom major Bharti Enterprises to create Bharti-Walmart, the consumer facing end of the US retail giant.

The idea was to build Walmart’s presence in the country until Indian government changes its FDI regulations. Till 2012, Walmart opened 20 cash and carry stores in the country.

The situation turned gloomy when Walmart found itself trapped in an alleged bribery probe that was unearthed in Mexico back in 2012. The probe soon turned into a scandal in countries like India, China, and Brazil.

Thus under the US anti-bribery laws, it was compelled to freeze the expansion of its Best Price Modern Wholesale stores in India till 2017. Not only this, the company also lost its partnership with Bharti Airtel in October 2013.

After attempts to set up its own ecommerce team in India during 2011-2013 (as per a Quartz report), later in 2014, Walmart opened up its cash and carry business to online buyers. Fast forward to three years, Walmart now owns a majority 77% stake in India’s ecommerce unicorn Flipkart for a whopping $16 Bn.

Further, Walmart narrowed its losses by almost 27% during FY17 compared to the 12 months in the previous fiscal. The company posted a loss of INR 75 Cr for FY17. It also witnessed a 10% revenue growth for the fiscal ending March 2017 as compared to previous 12 months.

The acquisition of Flipkart is in line with Walmart’s quest to mark its footprints across India. As Iyer said in a November 2017 media statement, “This year, India was made a priority market for Walmart, which means we’re getting more resources, more talent. This will help in accelerating stuff, and investments in the back-end and the supply chain will happen.”

With this planned acquisition, Walmart is diving straight into the battle with its arch-rival Amazon, which is exploring different mediums to build its presence in the Indian ecosystem. Also, Alibaba and Paytm-backed Paytm Mall is stepping steadily towards the third spot in the Indian ecommerce ecosystem.

But Iyer is confident on the growth of Walmart in India. As she said, “India is at an inflection point and is the most attractive market for us. Walmart’s business in India has grown in double digits since the first Best Price store opened in 2009.”

[The development was reported by ET.]