Amazon is on overdrive in India. Earlier this year, the world’s largest online retailer became the second-largest online marketplace in the country by shipments and gross merchandise value. (Flipkart remains number one in India.) It also announced an additional $3 billion investment, taking its total investment in India to $5 billion; it launched its popular subscription-based program Amazon Prime to drive customer loyalty; and it announced that it would be soon be introducing its Prime Video service. Recently, in October, the firm launched its “Global Store” for Indian customers enabling them to buy products sold on its U.S. website while paying in Indian currency. Prior to this, while customers from India could buy on Amazon’s U.S. website, they had to pay in dollars.

Amit Agarwal, Amazon India’s vice president and country head, says that “enhancing shopping experience” for customers is “one of the key pillars” for the company. With the Global Store, customers in India will have direct access to thousands of international brands and a starting selection of over 4 million global products. While initially the Global Store will have products from the U.S., over time, products from other key markets such as the U.K., Germany and Japan are also expected to be listed. India, which is one of the fastest growing e-tail markets around the globe, is the third country after China and Mexico to get the Amazon Global Store. This move will no doubt help Amazon compete more vigorously against Flipkart.

More importantly, perhaps, it will also help strengthen the company’s arsenal against the imminent entry of Walmart — the world’s largest brick-and-mortar retailer and its arch rival.

Amazon, though, is silent on Walmart’s reported entry into this segment. “We are not competition-focused, but customer-obsessed,” says Agarwal. “Our goals and our targets are only focused on our building a better experience for our customers and sellers.”

Walmart’s Entry: A Matter of Time

According to media reports, Walmart is all set to join the Indian e-tail party soon. While the company is reported to be talking to several Indian e-tailers like Snapdeal and Shopclues, the strongest buzz is around Walmart entering into a strategic alliance with Flipkart or making an investment in the company, possibly to the tune of $1 billion. While both Walmart and Flipkart refuse to comment on what they term as “speculations,” Rajneesh Kumar, senior vice president and head of corporate affairs at Walmart India, says: “E-tail is undeniably a very big change and is here to stay. Understandably, that is where the consumer is going. We believe the next five years will belong to those who commit to provide an omni-channel experience to customers.”

“Think of it as an alliance of the ‘Amazon-worrieds.’” –Kartik Hosanagar

Walmart currently has 21 cash & carry wholesale format stores, called Best Price, across nine states in India. This number is expected to increase to 70 over the next three to five years. According to Kumar, currently all stores (which are open only to commercial and institutional customers) provide an omni-channel shopping experience to the members. “B2B e-commerce is a major driver of growth for us in India,” says Kumar. He adds: “For us, India is a long-term commitment. It is a growing economy and hence an important market. We continue to look at all opportunities and keep scanning the business environment on how we can serve our business members better.”

Industry observers and experts believe that it is only a matter of time before Walmart makes a foray into online retail in India through some kind of an investment or partnership with a leading Indian e-tailer. Kartik Hosanagar, Wharton’s professor of operations, information and decisions, whose research focuses on the digital economy, in particular Internet media, Internet marketing and e-commerce, notes: “Walmart has been interested in India for quite some time now. They explored a partnership with Bharti but that fell through. [In 2007, Walmart had entered into a 50:50 joint venture with Bharti Enterprises. The partnership broke off in 2013.] Internet companies that are more used to a different pace and greater transparency are a better partner for Walmart.”

Hosanagar believes that Walmart’s India strategy will borrow heavily from its China experience: It will “partner with local companies that have better local knowledge.” He points out that in China, Walmart started with a small investment in Yihaodian. Later, it purchased Yihaodian in its entirety. And more recently, it has partnered with, including selling Yihaodian to “This way, it has partnered with China’s second largest e-commerce company to take on Alibaba (the e-commerce leader in China). This also allows Walmart to focus on its offline stores and simply set up an online store on”

Hosanagar also points to Walmart’s recent acquisition of in the U.S. for $3.3 billion. He notes that even though is unproven, Walmart was willing to pay a considerable amount because “it finally found a proven [individual, co-founder] Marc Lore, who is willing and capable of taking on” A partnership with a player like Flipkart will seek to do the same in India, says Hosanagar. “Think of it as an alliance of the ‘Amazon-worrieds.’”

Ankur Bisen, senior vice president for retail at Technopak Advisors, considers Walmart’s reported moves in India to be in line with its global strategy. He says: “With the acquisition of in the U.S., Walmart has put e-commerce at the heart of its growth strategy. It wants to protect its status as a dominant global retailer and recognizes the need to align with the rapidly changing world of retail. It also signals that it will not shy away from either building this capability in-house or pursuing acquisition opportunities, or both.” In India, Bisen notes, Walmart has organically built a cash & carry business that has “grown reasonably well” and has also started piloting “multi-channel options” in this business. Says Bisen: “This is in line with Walmart’s global approach of re-modeling brick businesses into multi-channel businesses.”

Rishikesha Krishnan, professor of corporate strategy and policy at the Indian Institute of Management (IIM) Bangalore and currently director of IIM Indore, sees Walmart partnering with Flipkart as a logical move. The current policy environment in India is not conducive for Walmart to make a direct entry into physical retail. But since the policy allows marketplace models in e-tail, Walmart can have a piece of the market via Flipkart. “There is a saying that an enemy’s enemy is a friend. Besides, Flipkart has shown the ability to compete strongly with Amazon for the Indian market. And India is the “next big thing” in retail. So it makes sense for Walmart to have a position in this market,” says Krishnan. S. Raghunath, professor of corporate strategy and policy at IIM Bangalore specializing in strategic alliances and strategic leadership, adds: “Walmart has been trying very hard to up the ante in online retail. The acquisition of in the U.S. followed by the news about Walmart’s interest in acquiring a stake in Flipkart fits with the company’s thrust to increase its play in the online retail space and add to its competitive strength.”

Power of Global Sourcing 

The big question is: What impact will the entry of the world’s largest retailer have on online retail in India?

“The Indian e-tail ecosystem will have a superior supply chain and a wider variety of products than what is currently available,” says Sreedhar Prasad, partner-business consulting at KPMG India. Prasad notes that while players have been investing in the last mile, customer experience and so on in recent years, there has not been much action in terms of bringing in newer and different products to Indian customers; e-tailers are sourcing from the same suppliers or the same type of suppliers. Prasad believes that this is where global players like Walmart or Tesco can add a lot of value in India.

“The Indian e-tail ecosystem will have a superior supply chain and a wider variety of products than what is currently available.” –Sreedhar Prasad

“If it is just an investment by a global player in a big Indian e-tailer, then it is not of much interest. But if there is an alliance between two [big players], then I am very bullish about it because the global supply chain giants enabling Indian e-tail can be a very powerful trend in the sector. The power of global sourcing, including sourcing from India itself, can be a big impetus to the e-tail ecosystem in India,” says Prasad.

Devangshu Dutta, chief executive of consulting firm Third Eyesight, notes that since its breakup with Bharti, Walmart in India has been restricted to its cash & carry wholesale business, Best Price, which primarily sells to small businesses. It has also been experimenting with overlaying e-commerce as an extension to the Best Price business. “An investment into an e-commerce platform could give it additional inroads into the consumer retail market by proxy. For a platform such as Flipkart, Walmart can provide additional product expertise and also allow it to diversify the merchant base as Flipkart needs to under the foreign direct investment (FDI) regulations.”

IIMB’s Raghunath suggests that Walmart can use the Flipkart connection to turn its current B2B stores in India into online retail business opportunities and warehouse locations for delivery. “Flipkart data can be useful for Walmart to project buyer behavior and preferences. Flipkart can be the front end with Walmart at the back end,” says Raghunath, adding that if the relationship works out, Walmart may look at deepening it further and “become a major player” in the Indian online retail market. Krishnan believes that any alliance between Flipkart and Walmart would be a “win-win” for both. “We don’t know the terms of Walmart’s investment in Flipkart, but if [Walmart] can get access to Indian retail/consumer data through this association that would be invaluable to them should they re-enter conventional retail.”

Third Time Lucky?

But Walmart’s India foray has not created any big waves up to now. As noted earlier, its partnership with Bharti Enterprises broke off in 2013 and since then, while it has been growing its cash & carry business, Walmart has been a fairly low-key player in India. Dutta, however, feels that its new partnership could work out differently. “Partnerships are an outcome of the objectives and behavior of both partners being in sync. The Bharti-Walmart joint venture broke up because the two partners viewed the Indian market, growth plans and investment needs very differently, within the constraints placed by the FDI policy. Any other potential relationship Walmart creates will be driven by the dynamics of that specific relationship, and their respective leadership teams at the time,” he notes.

“Retail is a dynamic and intensely local business, and success in one market is no guarantor of success in another.” –Devangshu Dutta

Bisen adds that e-tail in India has matured to a level where entry barriers are significantly high for a new entrant to gain market leadership. Walmart will be looking to “get a foot in the door in [what is] perhaps the last significant market opportunity for e-commerce where the pecking order is yet to shape up.” According to Bisen, Technopak’s view is that 80% of the e-commerce market is almost always marketplace driven and most major e-commerce markets are dominated by two players. He believes that the Indian market will also evolve towards this direction in the next four to five years. He expects Flipkart, Amazon and Alibaba backed ecosystems to occupy 80% of the Indian e-commerce market. “Who among the three will lead is an interesting narrative that will unfold and will solely be dependent on the strategies of these individual players,” says Bisen. What role Walmart plays in this remains to be seen.

According to the New York-based market research firm eMarketer, Walmart is the second largest online retailer in the U.S. after Amazon. However, while Amazon’s pure e-commerce revenue represents 74.1% of total sales, Walmart has e-commerce revenue of just 2.8% of its total sales.

Can Walmart’s entry in Indian e-tail help it in its battle with Amazon worldwide? Not necessarily, says Dutta. “To my knowledge, there are no retail rivalries that are truly global in nature. While companies may be multinational, retail is a dynamic and intensely local business, and success in one market is no guarantor of success in another.”