Walmart brings third dimension to India’s e-grocery war

Sunny Sen July 12, 2017 4 min

Story Highlights

  • Walmart is adding a third dimension to an ecommerce rivalry building up between Alibaba and Amazon, two sources told FactorDaily
  • Some of the companies that Walmart has approached are Grofers, BigBasket, and Satvacart in the past few months
  • The inventory-led model for a multinational is allowed in India only if companies like Walmart sell it to other retailers and distributors

Walmart has been trying to crack the online business globally for almost five years now. In India, it might do this sooner, by acquiring and partnering with existing e-grocers.

The American retailing multinational has been talking to e-grocers in India for acquisitions and partnerships, adding a third dimension to an ecommerce rivalry building up between Alibaba and Amazon, two sources told FactorDaily.

Some of the companies that Walmart has approached are Grofers, BigBasket, and Satvacart in the past few months. “It is the Global Strategy Team at Walmart, which is holding these discussions, essentially to understand the marketplace,” one of the sources said.

Walmart has been talking to e-grocers in India for acquisitions and partnerships, adding a third dimension to an ecommerce rivalry building up between Alibaba and Amazon  

Grofers and Satvacart did not comment on the news. BigBasket’s Vipul Parekh didn’t reply to FactorDaily’s message or calls.

But some of Walmart’s targets are already in advanced stages of discussions with other  competitors. FactorDaily was the first to report that Paytm Mall is in talks with BigBasket, India’s largest e-grocer, to invest $200 million in a strategic move that will eventually lead to an acquisition. Gurgaon-based GrocerMax, with which also Walmart has held talks earlier, is being  acquired by Trent Hypermarket, an equal joint venture between Tata Group and Tesco.

Walmart-India
Walmart already owns 21 cash-and-carry (wholesale) stores in India and has plans to open 10 more in the months to come

Albinder Dhindsa, founder and CEO of Grofers, confirmed that Walmart has been in touch with them. But, he said that it was for the cash-and-carry business. “They wanted to see how to partner better in the wholesale grocery space,” he said. He did not disclose any more specifics.

Walmart already owns 21 cash-and-carry (wholesale) stores in India and has plans to open 10 more in the months to come. The online strategy, a second source said, is different.

Indian law does not allow multinational companies to sell directly to consumers online through an inventory led model, which is also why Amazon operates in a marketplace model. The inventory-led model for a multinational is allowed only if companies like Walmart sell it to other retailers and distributors.

“Until foreign direct investment in retail opens up, everything is a speculation… The inventory-led e-grocery business will come, but only subsequently” — a source  

There are restrictions. “Until foreign direct investment (FDI) in retail opens up, everything is a speculation… The inventory-led e-grocery business will come, but only subsequently,” said the first source, who added that the global teams keep evaluating possible acquisition targets.

“Walmart has approached us,” said the founder of one of the companies mentioned above. “They want to invest in an existing player and provide them with the backend that will help them scale.”

Rahul Hari, founder and CEO of Satvacart, while offering comment on the Paytm Mall-BigBasket story, had said India is seeing a “third wave” in online grocery where big players are entering the market. “This wave will not go away quickly,” said Hari.

The other two waves were in 2011, when ZopNow, BigBasket and others started inventory-led e-grocery business, and in 2014, when Grofers and PepperTap introduced the marketplace model.

When contacted, a senior Walmart official said, “Without FDI, everything is a speculation… We are committed to grow our cash and carry business, and that is our focus right now.”

It is a global play

Amazon on Monday got a go-ahead from the Department of Industrial Policy and Promotion (DIPP) to invest $500 million in the food business, marking the largest investment in online food retail in India.

This also allows Amazon to launch its own private label — a move that can be detrimental for e-grocers such as BigBasket and Grofers, as also Paytm Mall, which is planning its foray into grocery.

Amazon on Monday got a go-ahead from the Department of Industrial Policy and Promotion to invest $500 million in the food business, marking the largest investment in online food retail in India  

Amazon was also in talks with BigBasket to boost its e-grocery business. It is not yet clear if Amazon has withdrawn its interest from the deal. In the US, it has bought Whole Foods for a whopping $13.7 billion. In India, too, it is scouting for the right acquisition targets.

Meanwhile, Walmart has been on an acquisition spree. It bought online apparel company Bonobos and money-saving shopping site Jet in the US, and Chinese ecommerce company Yihaodian.

“Walmart is a late entrant in the online space. But ecommerce and offline retail (or omni-channel play) will coexist,” said one of the sources. “While Amazon is buying brick-and-mortar companies, Walmart is targeting online players.”

The transition is already visible — in the first quarter of 2017-18 Walmart’s global online revenue grew by 63%.


Disclosure: FactorDaily is owned by SourceCode Media, which counts Accel Partners, Blume Ventures and Vijay Shekhar Sharma among its investors. Accel Partners is an early investor in Flipkart. Vijay Shekhar Sharma is the founder of Paytm. None of FactorDaily’s investors have any influence on its reporting about India’s technology and startup ecosystem.