Retail Battlezone
The two American retail giants have fought pitched, bruising battles on their home turf, and in markets around the globe. Walmart, the world's largest retailer, and Amazon, the e commerce behemoth, have crossed swords once more, this time in the fastest growing major economy, India.
Jeff Bezos owned Amazon, with its smart technology backed consumer solutions, has always had the upper hand. It has left Walmart little choice but to join the digital bandwagon to grow. In the last couple of years, Walmart has made a bevy of online acquisitions across the world, from Jet.com in the US to JD.com in China. The most recent is, of course, the $16 billion (Rs1.07 lakh crore) investment in Indian online retail major Flipkart its costliest acquisition so far. Despite these expensive investments, Walmart has consistently struggled to make its e commerce strategy a success. In 2017/18, Walmart's net income dipped to $10.5 billion (from $14.2 billion). Amazon's, on the contrary, grew by 28 per cent in 2017.
Amazon has outwitted Walmart in almost all the markets the two have competed in. In the UK, Walmart had invested in Asda, a supermarket chain, and business was kind of chugging along until Amazon tied up with grocery retail company Morrison and started delivering grocery at the doorsteps of consumers. Walmart sold Asda to Sainsbury last year for $10.1 billion, keeping a 42 per cent stake for itself. Similarly, in Japan, Walmart had acquired retail chain Seiyu and was struggling to make a success of its proprietary EDLP (Everyday Low Pricing) model. When Amazon entered the market in 2017, Walmart hurriedly tied up with online retailer Rakuten to provide online grocery delivery. In China, Walmart didn't have to fight it out with Amazon but had to be happy playing second fiddle to market leader Alibaba which has an 80 per cent share of the retail market in the country.
Amazon has a clear upper hand in India too. To begin with, Walmart has invested in a business that might have grown by over 30 per cent in the last one year but it has incurred a whopping Rs8,771 crore loss (on revenue of Rs19,855 crore) in 2017/18. In fact, Flipkart's losses last year were almost half of Walmart's total profits. If it keeps losing money, it will show up in Walmart's bottomline.
Amazon entered India a good five years after Flipkart launched its business but is neck and neck with it in market share. While Flipkart's gross merchandise value (GMV) is at $7.5 billion (Rs48,750 crore, which includes $2.2 billion, or Rs14,300 crore, of Myntra and Jabong), Amazon's is $5 billion (Rs32,500 crore). Amazon also has an edge in terms of being more diversified. While Walmart is only about retail, Amazon likes to call itself a technology company which also offers online retail.
You’re reading a preview, subscribe to read more.
Start your free 30 days