Walmart to build global synergies with Flipkart

Five years after acquiring a majority stake in Flipkart, Walmart is beginning to build synergies with its global operations. It is getting some of its international vendors to set up manufacturing units in India to meet sourcing requirements, while also looking to use Flipkart’s expertise in setting up a marketplace in Africa. Similarly, PhonePe and the retail giant’s Mexican financial services are collaborating, Judith McKenna, president & CEO, Walmart International, told TOI in an interview. The US retail giant has got its team of leaders to India to give them first-hand knowledge of a market where Walmart sees immense potential in the years ahead. While Walmart has acquired the shares held by Tiger Global in Flipkart, McKenna says there is no timeline for an IPO. Excerpts:

How did the Flipkart acquisition help Walmart and what have you brought to the table? Has it helped open doors for Walmart to get into a market where FDI regulations don’t permit multi-brand retail?
We had always planned that a couple of years along the line, we would start to have more cooperation. We have learnt a lot from both the businesses (Flikpart and PhonePe). Flipkart’s ability to move with speed and to innovate is hard to replicate around the world. We have watched how they develop seller relationships, how they use data to think how customers are behaving and how they can be served better. We have a business in Africa, called Massmart, and we have asked them to be the partners and actually build the marketplace there. We have a payment capability in Mexico called Cashi and PhonePe has been helping to advise on that. But the two businesses have to focus on the home market. They need to be strong here because the size of the opportunity is so great. We don’t want to miss out on that because that’s a focus for us. Walmart had a long history here, we stayed in India with the cash and carry businesses. We could see with the way that the market was moving, we have become much more of a digital, e-commerce business around the world. Our e-commerce businesses were worth about $80 billion in turnover last year.

You have picked up Tiger Global’s stake in Flipkart. Which other shareholders did you buy out?
We did indeed buy out Tiger’s stake and some others as well, including those who were part of an automatic and self-participation right that was triggered by one party selling.
Is this consolidation of holding a preparation for the IPO? Do you have a time frame in mind for an IPO?
This is not part of the IPO and we don’t have a time frame in mind. We have been very clear that if the time is right and the businesses wish to go for an IPO, we will be very supportive of that. But, ultimately, that will be a board decision.
In 2018, when you acquired Flipkart, the Indian e-commerce market was largely a two-player market with Flipkart and Amazon. How will Flipkart’s strategy evolve in the years to come?
The business has strong fundamentals. It knows its customers, and has a broad reach across India. Flipkart is a strong competitor here. Flipkart is contribution margin positive and we are pleased with the way they are developing the ecosystem as well.
You announced a large sourcing plan from India. Do you see challenges in terms of the quality of products? Which segments are you going big on?
We made a commitment that we would export $10 billion a year out of India by 2027. The work that’s being done by the government on infrastructure is a huge help. The way we have approached this is to say what are the businesses already here today that we could lead into more heavily. So, footwear, toys, supplements are areas we want to focus on. Also, packaged goods as well as seafood. We have a couple of different routes to help. One of them is to get non-traditional Indian manufacturers (international vendors) to open manufacturing facilities here. But the primary route is to develop Indian manufacturing businesses to meet the demand. We have set up a supply development team, which will help work with vendors here to see how we can help them become export-ready.