Walmart may step up sourcing from India for its global operations as the Flipkart acquisition gives it access to the huge supplier base of the e-commerce company.
The US retailer currently sources goods worth over a couple of billion dollars, such as apparel, generic medicines and handicrafts, from Indian suppliers such as Welspun and Dr Reddy’s for its stores in the US, UK, Canada and South America.
Walmart’s sourcing from India is still small compared with that from China. But the combination of its Best Price cash and carry business and Flipkart is now expected to help boost India’s contribution. The bigger base of suppliers from Flipkart will offer it more opportunities to source for its retail outlets abroad, while also allowing suppliers a wider exposure to overseas markets.
The India market opportunity for Walmart will in fact be meatier than that from building a larger supply chain to source goods for global markets. Between the cash and carry business and Flipkart, Walmart will focus more on India, with its backend systems and expertise in large-scale sourcing. It will focus on expanding the 100 million Flipkart customers.
Walmart has over 20 Best Price cash and carry outlets in India. In fiscal 2017, the India unit posted revenue of Rs 3,641 crores, of which two-thirds came from sales of food and groceries.