Written By Sagar Malviya, ET Bureau
MUMBAI: The Indian unit of Walmart said it could leverage Flipkart to cross-sell each other’s private brands, use the expertise of the e-commerce firm in technology and analytics, and in turn, help them with grocery retailing.
“Currently, we are selling our private brands only in our stores but don’t see any reason why we can’t sell it outside our stores. With Flipkart, there is an option,” said Krish Iyer, chief executive at Walmart India. “Flipkart is a platform and there are sellers on it, and when you talk about grocery, it’s about getting the right sellers to complete the mix. They are very good at technology, analytics and customer relationship management.”
For Walmart India, private brands — Right Buy and Member’s Mark — account for roughly 6-7% of its overall sales unlike its Bentonville-based parent that gets nearly a third of its revenues from own labels in the US. India allows 51% FDI in multibrand retail, while 100% FDI is allowed in cash-and-carry wholesale ventures that sell grocery and other products to business entities such as neighbourhood stores.
Technically, Walmart cannot sell its own brands directly to end consumers, or list it directly on Flipkart’s platform. However, their private labels are already being sold at kirana stores which have to buy them from Walmart’s Best Price wholesale stores.
“As long as there’s a reseller involved, there should not be any legal issue. Walmart can also set up another company just for these FMCG brands and list it at Flipkart but there could be complications,” said Devangshu Dutta, chief executive at consultancy firm Third Eyesight. Private labels are mostly priced much lower than branded products because of substantial marketing and distribution savings.
Retailers make up for lack of media marketing through instore promotions and prominent display, and in the bargain, earn higher margins than national brands. Flipkart, too, is present in a host of private label categories across electronics, appliances and accessories under Billion brand name while Myntra’s portfolio of own brands includes Roadster, Dressberry and Anouk, among others. Walmart clarified that both companies have a separate team and the benefits will not accrue immediately. “Nothing is going to happen in the next 2-3 months.
It takes time and needs a lot of planning and good execution to get the benefit in the short to medium term,” said Iyer, after opening its 22nd store in the country in Ludhiana, and sixth in Punjab where it opened its first door nearly a decade ago. With brick-and-mortar retailer Walmart buying an online firm, several retailers have been eyeing cross-channel deals. Walmart, in India, generates nearly half its sales from outside its cash-and-carry stores. “It’s all about omni-channel — any time and anywhere concept because the customer wants to shop that way,” said Iyer.