Walmart's $16 billion acquisition of Flipkart could soon spoil consumers with choice. Flipkart definitely may have been the first mover in the Indian e-commerce space, but its operations often haven't been up to the mark. There have been enough instances of product tampering and many a times consumers have even complained of receiving fake products. As consumers, most of us invariably opt for Amazon, as it comes with the assurance of serving quality products. The best gift that Walmart would give Flipkart is robust retail operations processes. Walmart globally has been investing significantly in technology in order to offer a seamless omni-channel experience to its consumers.
A better managed retail operations network will not just increase competitive intensity between Flipkart, Amazon and the likes of Reliance Retail and Future Group, but it will also step up consumption. Walmart's USP has always been its private label merchandise which it offers at highly competitive prices. This is not just in apparel but also in grocery. As Walmart will bring in that efficiency into Flipkart, one is going to see the likes of Amazon and Reliance Retail leaving no stone unturned to respond to Walmart's moves.
"Increased competitive intensity, better pricing and better merchandise will obviously lead to increased consumption," points out Arvind Singhal, Chairman of retail consultancy, Technopak. Singhal expects a significant growth in online grocery retail and the emergence of private label processed food brands.
In fact, Future Group is already toeing Walmart. Apart from announcing an ambitious strategy of integrating its grocery stores with technology, Chairman Kishore Biyani, is busy carving his FMCG empire, which is already a Rs 2,000 crore business and his ambition is to become a Rs 20,000 crore entity by 2021. His brands Tasty Treat, Desi Atta, Clean Mate and Kosh are already challenging the products of FMCG stalwarts such as HUL, Nestle and P&G.
Indian consumers, especially in the smaller markets still prefer to shop in brick and mortar stores and to reach out to them, both Walmart and Amazon definitely need a physical presence. With FDI in multi-brand retail still a far cry, the two global retail giants have to make-do with ecommerce. However, the Indian online consumers have plenty to look forward to, as they will soon be inundated with a plethora of shopping options across categories at great prices. E-commerce till date had been all about deep discounting, but with the global biggies entering the fray, the action will now move to private brands on e-commerce platforms.