US-based retail chain, Walmart, is ready to expand its presence in India by going online. As reported by ET, a team of 15-17 people under Walmart India’s COO Arvind Mediratta have been working on developing an electronic platform that is expected to go live in the next three to four months. The platform would have a marketplace model similar to that of Amazon and eBay.
In 2011, after Indian Government waved the flag for 51% FDI in joint retail, global retail companies like Walmart, Carrefour and Tesco entered the country. Walmart and Bharti Enterprises had already established a joint venture back in 2007, Bharti Walmart Private Limited, for wholesale cash-and-carry and back-end supply chain management operations in India. However in October 2013, the two companies went on separate ways.
Now, the wholesale cash and carry business is run by Walmart and Bharti runs the Easyday supermarket chain. Due to the FCPA compliance process Walmart’s physical store expansion in India has retarded. Entering into the online retail space will give a boost to the company’s reach in the country.
In the next 5 years, there will be 500 Mn people who will be digitally active in the country, hence the scope for online retail is huge, however managing such large audience at an individual retailer level would not be easy. At the Internet Retail Expo 2014, Shrutika Verma, Special Correspondent, Business World said “Number of credible suppliers is not very high, and hence managing marketplace is a challenge”
FDI in eCommerce is still a debatable topic. Walmart’s plan to enter as a marketplace is a way to grow its presence without going against any policies, as being an online store like Amazon and eBay, it will have indigenous retailers selling on its store. It is yet to be seen if Carrefour and Tesco will follow its lead.
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