Total U.S. e-commerce spending will surpass $1 trillion for the first time this year according to market research firm Insider Intelligence. But it expects Walmart’s market share to remain stagnant at 6.3% versus Amazon’s 37.8%. Walmart’s share was actually slightly higher at 6.5% in 2020.
Walmart-Amazon Battle Royale Heats Up in India
Flipkart’s rapid expansion looks firmly pointed at U.S. e-commerce company ahead of a possible IPO next year
By Megha Mandavia
Heard on the Street
Wall Street Journal
June 17, 2022 6:23 am ET
Walmart WMT -1.93% is betting big on Indian e-commerce giant Flipkart’s expansion ahead of a possible U.S. public listing next year. Success would give the U.S. retailer’s global footprint—and e-commerce chops—a big shot in the arm. Failure could see it fall further behind Amazon. AMZN 2.47%
Last week, Walmart International Chief Executive Judith McKenna said Flipkart has lived up to expectations since Walmart invested $16 billion four years ago, and the company remains supportive of its IPO plans. Walmart owns three-quarters of Flipkart, which was valued $37.6 billion after its fundraising round last July. Flipkart, which also counts Tiger Global and SoftBank as investors, is Walmart’s most promising bet against Amazon—in one of the most intensely competitive and largest online markets in the world.
In the past 24 months, Flipkart has entered several new businesses, including groceries, ticketing, healthcare and social commerce. It has also doubled down on its core e-commerce proposition with strategic investments in popular offline brands. Flipkart is moving to compete with Amazon for more affluent consumers as well. Until now, it had predominantly been in semiurban and more value-focused segm
With the rapid expansion, Flipkart hopes to quickly add to its top line, push up its valuation and position itself as India’s largest consumer internet firm—not only in e-commerce, but in as many segments as possible to get most Indian internet users onboard. India’s e-commerce market is largely controlled by Amazon and Flipkart, despite a tough regulatory environment for foreign firms.
It may seem that Flipkart now has its fingers in too many pies—a risky proposition in a challenging economic environment. But the superapp model isn’t new to the region. It keeps users tied into an ecosystem, helps cross pollinate sales among different offerings and entices them to spend more time on the platform.
If these big bets pay out, Flipkart’s success will send a signal to investors that Walmart can take on Amazon in other parts of the world. That is critical because Walmart is still struggling to make headway against Amazon at home.
Total U.S. e-commerce spending will surpass $1 trillion for the first time this year according to market research firm Insider Intelligence. But it expects Walmart’s market share to remain stagnant at 6.3% versus Amazon’s 37.8%. Walmart’s share was actually slightly higher at 6.5% in 2020.
Over the past few years, Walmart has boosted its e-commerce capabilities in the U.S. through investments in fulfillment centers, the marketplace and delivery. However, it still isn’t clear whether the company will be able to hold on to pandemic-era gains as spending shifts back to services. If Walmart doesn’t develop a more muscular e-commerce operation, its sales and profits could be affected, warns UBS.
A blockbuster IPO by Flipkart could be Walmart’s saving grace against Amazon—and give the world’s largest retailer a much-needed win in online shopping.
Write to Megha Mandavia at megha.mandavia@wsj.com
Walmart-Amazon Battle Royale Heats Up in India - WSJ |
