Walmart to focus more on omnichannel, online B2B to beat competition

Sounding bullish on the growth prospects here, Walmart India Tuesday said it will focus on omnichannel retail to gain traction in its B2B e-commerce business to stay ahead of the competition. The comments come despite the government last week notifying radical changes in FDI rules in e-commerce space, impacting the entire online marketplace segment which bar players like foreign-owned Amazon and the Walmart Inc-run Flipkart from selling private label goods produced/procured by their subsidiaries.

Walmart India does not run Flipkart, but its parent Walmart Inc does, after the USD 16-billion deal to take over the largest homegrown online retailer last August, making it the largest FDI ever in the country with a 77 per cent equity ownership. The new rules do not allow online marketplaces that have foreign investments from offering products of sellers in which they hold stakes.

For any online retailer, private labels constitute a good part of their business volume, it can be noted and according to a recent Crisil report, 35-40 per cent of e-retail industry sales--amounting to Rs 35,000-40,000 crore--could be hit due to the tightened norms. The move has been criticized by many as anti-investment and a way to placate the local traders, a key vote bank of the ruling BJP.

Last year the company opened two stores after a hiatus of nearly six years and this year it is planning to open another five to seven new stores. We are growing our cash-and-carry business extremely well, the company said. "Omnichannel and B2B e-commerce continues to grow at good double-digits. We continue to invest in opening more stores here," Walmart India president and chief executive Krish Iyer said on the sidelines of a national food summit here Tuesday, without quantifying the growth numbers.

He observed that consumers are going digital and food retail and food services are undergoing the digital transformation in three distinct ways--customer experience, digitisation of customer data that leads to better omnichannel experience, and enriching physical via digital. With e-commerce, hyper-local delivery, digital PoSes, consumer touch-points are becoming digital and increasing customers' engagement with brands significantly, he noted.

"When Walmart India introduced the option of e-commerce or omnichannel in our stores, the same customer who used to buy goods say worth Rs 100 has started buying worth Rs 180. Though the share of the store may have gone down to Rs 70, e-commerce has become 110," he said, underlining the gaining traction of the online space. He further said the share of e-commerce in retail is expected to rise further, despite growth in general trade, and growth in modern trade bricks and mortar to 12 per cent in the next 10 years from the current 2 per cent.

Sounding bullish, he said the ease of doing business has improved, and consumption that attracts investments from both domestic and foreign investors is having a profound impact on the retail sector as well. The GDP is expected to touch USD 6.3 trillion over the next 10 years clipping at a CAGR of 9 per cent, he said.

He also said the country's middle-class become the largest segment accounting for 40 per cent of the total consumption by 2027, up from current 27 per cent now. "We believe strongly in the strength, stability and growth of both the rural as well as the large and small towns. The proliferation of consumption in these towns is going to go up from 36 per cent currently to 45 per cent over the next decade," he said.

(With inputs from agencies.)