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A Flipkart skill leaves Walmart's CEO seriously impressed

The CEO noted that Flipkart was years ahead of Walmart when it comes to the level of technology used.

ET Online|
Apr 17, 2019, 07.49 PM IST
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One of the key aspects about Flipkart according to McMillon is the ability of the company and its arms to take on anyone in the Indian market — including Amazon.
Walmart President & CEO Doug McMillon, during his two-day trip here to take stock of the Indian retail market, was left seriously impressed with the technological prowess that Flikart posseses, according to various news reports.

The CEO noted that Flipkart was years ahead of Walmart — its new owner — when it comes to the level of technology used. The technology Walmart deploys in the US is no match for what Flipkart uses in India, McMillon said as per reports.

Walmart will look at leveraging some of Flipkart's tech expertise and replicating them in markets elsewhere, he said. The Bentonville-based retail giant would like Flipkart's technological knowhow, processes and tools to be implemented in its global offices, BS quoted the CEO as saying.

At his townhall address to Flipkart employees at the company's headquarters in Bengaluru, McMillon underlined how important India was in Walmart's global plans. The flagbearer of Indian ecommerce — along with group companies Jabong, Myntra and PhonePe — is all set to play a crucial role for Walmart, he said.

McMillon marked out PhonePe — the app that recently crossed the 2-billion mark in digital payment — and Myntra for special praise. He said Walmart was looking forward to help from Jabong and Myntra — which he though was brilliant in how it built its brand — to set up a fashion business.

One of the key aspects about Flipkart according to McMillon is the ability of the company and its arms to take on anyone in the Indian market — including Amazon, whose entry has fundamentally reset everything about Indian ecomm.

A bulwark against a ruthless rival
For quite some time, Amazon — regarded by one and all as the world's most ruthless competitor — has been successfully building scale at the back end. Its product assortment has gotten bigger, its seller base deepened, and its warehousing and transportation infra is becoming stronger.

More importantly, its investments in tech has markedly brought down its operational costs — something that could turn into an X-factor in a complex market like India.

The deep tech capacity of Flipkart is what Walmart plans to use to counter Amazon's surge in India. Walmart already has huge expertise in areas like pricing, merchandising, global sourcing and unified commerce. While Flipkart will benefit from Walmart's formidable business set-up and expertise in large-scale sourcing, Walmart could leverage Flipkart's technological abilities to make product assortment and customer offering substantially better.

Analysts say Flipkart has retained the agility and culture of innovation associated with startups. From Walmart's viewpoint, Flipkart’s 'online-first' and 'online-ready' approaches could be real clinchers. Also, one must not forget how Flipkart's tech expertise will help Walmart streamline the cash-on-delivery model which, according to experts, is one of the most crucial factors for any etail company for succeeding in India.

No price too high
When a mammoth $16-billion was paid for a 77 per cent stake in Flipkart, many industry insiders said Walmart was paying too much for too little. But Walmart had a decisive thought process behind the purchase. At the beginning of last year Walmart had just 20-odd stores here — too small a number for someone hoping to conquer a massive market like India. No price was too high for a significant, readymade foothold in this important market which Walmart hopes will eventually help it put a check on Amazon — the giant whose conquest of retail is almost complete, and whom only Walmart has any realistic chance to rival.

The etail market in India is forecast to touch $200 billion over the next few years. McMillon's visit comes at a time when Flipkart's fierce battle with Amazon in rising in scale and intensity. Mukesh Ambani, India's richest man, has also announced big ecommerce plans to tap into the huge opportunity that India offers.

"Walmart’s war with Amazon is fought on many fronts and in many geographies, and ceding a market as big as India to Amazon would set Walmart back in that global battle," says Aswath Damodaran of Stern School of Business.
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