Flipkart may source pan-Indian regional food brands via Walmart deal, say analysts

HYDERABAD: Flipkart might bring in local food brands and sharpen focus on electronics to outsmart Amazon in India as the final stages of deal talks happen between US retail giant Walmart and Indian e-commerce major Flipkart, analysts said.

Since its launch in India, Amazon Pantry has made available avocados to potatoes and meat to ice creams deliverable in a couple of hours, but has not yet managed to penetrate through Tier II and III cities in India. 

However, Walmart, which launched its business-to-business e-commerce marketplace in India in 2014, has silently been building at least a couple of warehouses in every state across the country and has been sourcing products through regional players, said Nitin Lodha, a lead e-commerce strategist at Chitrangada.com.

“For example, in Madhya Pradesh, if you go for locally popular snack brands like Akash or masala brands like Pusph, all these regional brands are available in the Walmart B2B marketplace, something that Amazon lacks. By default, when they’re going to acquire almost 85 per cent of Flipkart, they will integrate their warehouse inventory with it,” Nitin said.

Another aspect that the deal might cover is taking hold of the electronics space, which has only a few physical touchpoints in India, in which Flipkart already has a reasonable market share, an analyst said.
“In electronics, there might only be a few thousand outlets. This category does not have a big retail footprint and for people to explore and access the electronics product category, I think e-commerce is a great place,” the analyst said.

Apart from disrupting the Indian marketplace through its regional sourcing, Flipkart’s expanded portfolio might also prod larger retailers like Big Bazaar to make a beeline to expand their own e-commerce platform.“Sourcing, supply chain, logistics, warehousing — given their size and scale, there is a huge benefit to anybody they (Walmart) partner with. So, from that perspective, it will add a lot of value to what someone like Flipkart does so well,” said Rajat Wahi, Partner, Deloitte India.