CCI go-ahead sets ball rolling for Flipkart-Walmart collaborations

Digital payments is a major area American giant could leverage for global operations

With the Competition Commission of India (CCI) giving its nod to Walmart for acquiring 77 per cent stake in Flipkart for $16 billion, the ball for collaborations between the US retail giant and the country’s largest e-commerce player has begun rolling.

Prior to the announcement of the deal, which happened in May, both companies had extensive discussions on how they could leverage each other’s strengths. Several people Business Standard spoke to alluded that Walmart’s investment in Flipkart isn’t only for growth in India, but also for leveraging it to start winning in online retail across the globe.

“Apart from obvious long-term commitment and access to capital, I think what will be most beneficial for us is Walmart’s strength in sourcing and omni-channel. They are the global leaders in this space and can help us a lot here,” said a top executive of one of Flipkart’s subsidiary.

But it’s going to be a two-way street. Walmart, when announcing the deal, had already said that Flipkart’s technology and understanding of online retail would be invaluable to it. The company has struggled to keep pace with rival Amazon in the US and Europe, who after conquering the online market, has now begun experimenting in Walmart’s traditional offline space. Digital payments could be one of the first areas that Walmart could leverage for its global operations. The company has thoroughly lacked any play in this space and would want a partner that understands transactions at scale, which PhonePe, the payments subsidiary of Flipkart, has cracked very well in India.

While PhonePe has said that it isn’t planning to go global anytime soon, the scope for sharing of technologies and knowledge will depend on how quickly Walmart can integrate Flipkart as well as its subsidiaries. In a call with investors after the announcement of the investment in Flipkart, Walmart’s executive team, in a call with investors, had expressed great excitement for learning about the payment’s piece from PhonePe. Fashion is the other big piece that Walmart could be interested in. The category makes up a small percentage of the US giant’s sales globally and could leverage the trio of Flipkart, Myntra and Jabong to grow in this country.

India is already a big manufacturer of textiles and fashion, and Flipkart has already partnered with several brands — both local and global — to sell their products on its platform. “We’d love to take our private fashion labels to Walmart’s stores across the globe. Maybe we could start with regions that have a high presence of Indian diaspora. These discussions will happen in the future and we’d want to leverage their huge size to grow our own business,” said a Myntra executive.