May 14, 2018
Can Walmart Cash in on India
Anytime a company or brand wants to open a new market somewhere they have not previously been, there will some cultural hurdles to get over. This is especially true when that new market is in a foreign country or a developing economy … or both. The nature of these markets creates a challenging communications scenario for all involved.
The company or brand needs to know what will effectively connect with the consumers in that new market. They need to craft a message that engages, rather than offends. This process can be fraught with potential pitfalls… But, when you overcome those and connect with the new market in a way that feels familiar and compelling to them, that risk can pay big dividends.
One of the tried and true ways to break into a new market is to work with or through a brand that’s familiar in that market. Recently, Walmart provided an example of this strategy in its move to take control of the Indian online retailer Flipkart.
Flipkart delivery people are familiar sites in most major Indian cities, and now Walmart owns a controlling interest in that company. This is a huge win for Walmart, which has been battling Amazon for a retail foothold in the company, even as Flipkart had the market cornered.
At some point in the back and forth battle, Walmart decided, “if you can’t beat ‘em, join ‘em.” Or, in this case, take control and work within the established consumer connection and business infrastructure. That trade-off, as well as the opportunity to get the jump on Amazon while eliminating a major competitor, made the major expense Walmart paid well worth the investment.
Sure, the deal won’t pay off immediately, but with Walmart and Amazon running neck and neck in the U.S., the company that got the best and most direct crack at the massive Indian market would have an immediate advantage on the global stage. How important was this deal to these two companies? There are reports that Amazon was in negotiations with Flipkart to do exactly what Walmart just did… they just didn’t get the deal.
Why is this so important? Because most international retailers look at India as the next great e-commerce marketplace. The country has a huge number of consumers and a fast-growing economy, meaning those consumers will soon have more money to spend. Given the logistics involved, Indian e-commerce is a lot more attractive to larger retailers than brick-and-mortar footprints at this point.
By wining Flipkart, Walmart not only holds Amazon at bay, the company gains a system they already know is working, and one that current Indian consumers are very comfortable working with and buying through.
Ronn Torossian is the CEO of 5W Public Relations