Walmart CEO Doug McMillon said on Thursday that he sees cash-and-carry and online retailing as two different types of businesses and predicted that India would have more than two major players vying for a share of its rapidly expanding e-commerce market.
Addressing a joint press interaction with Binny Bansal, co-founder of Flipkart, a day after the U.S. retail giant said it would acquire about 77% of the Indian firm for $16 billion, Mr. McMillon pointed to the differences in the nature of Walmart’s existing operations in India and Flipkart’s business, when asked whether a merger of the two companies’ current operations was on the cards.
Dressed in blue jeans and a black Flipkart T-shirt, Mr. McMillon said India would have more than two players in the e-commerce market, a reference to Flipkart’s chief competitor, Amazon. “Over time in India, there will be a more competitive environment.”
Fierce competition
Walmart’s expansion in the online retail space in India comes after Amazon CEO Jeff Bezos has committed to investing $5 billion in the firm’s Indian unit and as Paytm Mall, backed by China’s Alibaba, is steadily expanding its operations. Walmart also plans to add 50 new cash-and-carry stores in the next four to five years.
Walmart's total investment includes $2 billion of new equity funding, which will help Flipkart accelerate growth in the future. Walmart and Flipkart have also said they are in discussions with additional potential investors who may join the round, which could result in Walmart’s stake moving lower after the transaction is complete.
Mr. McMillon asserted that Walmart’s cash-and-carry business was intended to help the farming community in India. The company's operations could help with both the supply chain as well as the cold chain, he added.
“Make in India is something exciting for us,” Mr. McMillon said. Ninety-five per cent of what Walmart sells in India is procured locally, he added.
Asked about a statement from RSS-affiliate Swadeshi Jagran Manch opposing the Flipkart acquisition, Mr. Bansal said the collaboration would potentially create lakhs of jobs across the country.
Mr. Bansal said the number of online sellers would go up to five lakh from 1.3 lakh now, creating a large number of jobs. He felt that e-commerce and start-ups were the “two engines” of growth in India.
Asked whether Flipkart was looking to expand its business to other countries, Mr. Bansal said the opportunities in India itself were huge. “We continue to stay invested and growing in this market for now.”
