Walmart to improve Flipkart's supply chain to build grocery and daily essentials space; to focus on training MSME entrepreneurs

The American retailer will invest in areas that will help Flipkart, Walmart and its global supply chain, in India

Walmart, which owns 77 percent of e-commerce firm Flipkart, will strengthen its investment in the supply chains of both the companies to build up the grocery and daily essentials space, which will help broaden consumer and merchant base, two officials with the American retail giant told Tech2.

India is one of the five largest markets for Walmart when it comes to global sourcing. Getting more small and medium businesses — sellers, farmers, manufacturers or traders — early, will help them understand how global businesses work, one of the officials said.

“That’s where we make the investments. One way to do that is by housing more, better and bigger suppliers,” said one of the officials on the sidelines of the launch of Walmart Vriddhi Supplier Development Programme. The programme aims to connect supplier communities of Flipkart and Best Price.

Best Price is the cash-and-carry, or the wholesale business of Walmart, which has 27 omnichannel stores and three fulfilment centres in nine states.

Flipkart. Image: Reuters

Flipkart. Image: Reuters

“We will have a unique network — think of it as an institute-type approach — that provides in-person tools and training to really unlock the true potential of MSMEs’ to help them grow and prosper,” said Judith McKenna, President and CEO of Walmart International, at the launch of Vriddhi.

Vriddhi, or growth in Hindi, is the first joint launch by Walmart and Flipkart since the acquisition in 2018.

Walmart needs to build the supplier network because India’s foreign direct investment (FDI) norms do not allow Best Price to sell on Flipkart. But, suppliers can. Also, sellers can buy Walmart’s private labels and sell them on Flipkart.

“In the first five years, our commitment is to 50,000 MSME (micro, small and medium enterprises) entrepreneurs. We will train them at 25 institute hubs strategically located near manufacturing clusters across India so that they are convenient to access,” McKenna said. “This is a pan-India initiative, and we believe it is also unique in its geographic spread, which makes it open to many more businesses and entrepreneurs.”

Flipkart recently registered a new company — Flipkart Farmermart — to run a farm-to-fork market, and take on the rival Amazon. The company has committed investment of over Rs 2,000 crore in Farmermart.

Flipkart always worked with suppliers that helped them build the India business, and so had Walmart, the second official said. “Together it feeds deep into Flipkart’s, Walmart’s and the global supply chain businesses,” the official said.

Indian laws don’t allow subsidiaries or parent companies of e-commerce firms to become sellers. “It is very different from the US, where we have a full-blown omnichannel strategy… This is the way we find synergies (in India),” said the second official.

Talking of synergies, the first official said technology, supply chain, building best practices and looking at better go-to-market strategies, Walmart and Flipkart could have many things in common.

The synergy and supply-chain network will help Flipkart penetrate deeper into India, with its grocery market, the cornerstone of success for any e-commerce company when it comes to building a repeat buyer base.

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