BUSINESS news does not repeat itself but it sometimes rhymes. In 2007 Walmart, America’s biggest grocer, crowed that it would crack the coveted Indian market by being the first global retailer to set up shop there, pipping envious rivals in the process. On May 9th it announced much the same thing: its time in India has come, this time by virtue of paying $16bn for a majority stake in Flipkart, India’s largest e-commerce outfit, which had also been coveted by its vast online rival, Amazon.
The sense of déjà vu owes to the fact that its original foray proved a disappointment. Walmart’s hopes of somehow circumventing rules to protect local shopkeepers, which have long prevented most foreign retailers from opening stores, have been repeatedly dashed. A decade on it has a meagre 21 wholesale stores in India, generating just 0.1% of its $500bn in global revenues and a small loss to boot. Somehow that has not dissuaded the beast of Bentonville from undertaking the biggest foreign acquisition in Indian history.
The Indian e-commerce market is as different from America’s brick-and-mortar retail landscape as Walmart’s Arkansas home is from Bangalore, the collection of traffic jams where Flipkart is based. Walmart probably has too many stores in its mature home market. Flipkart operates...Continue reading