Even after acquiring India’s largest ecommerce company Flipkart, Walmart will stay away from applying to invest in a food-only retailing venture in the immediate future that will allow the US giant to stock and sell groceries directly to consumers through the online platform.
Walmart would rather have a presence in the food products market through third-party retailers on Flipkart and escape the scrutiny and riders associated with foreign direct investment of up to 100% in food-only retailing ventures, according to sources.
Walmart’s strategy is in contrast to arch rival Amazon, which received government approval last year for a fully owned food retailing subsidiary that the Seattle-based ecommerce behemoth is yet to start. Amazon’s plans hit a hurdle after the government asked it to keep separate equipment, machinery and warehouses for the food products business and not to mix or share anything with its flagship marketplace business Amazon.in.
Walmart has always maintained that a food-only brick-and-mortar venture doesn’t make business sense because of the wafer-thin margins.
Walmart would rather wait until India allows such ventures to sell non-food items like soaps, toothpastes and personal care items to make the business viable for store operators.