In this file:
· Walmart Got a $10 Billion Surprise After Buying Flipkart
· Walmart remains the largest U.S. retailer, Amazon a distant second
· Walmart Has Already Lost Its Battle With Amazon
Walmart Got a $10 Billion Surprise After Buying Flipkart
Flipkart board authorized PhonePe’s plans to raise $1 billion
PhonePe will become independent unit with distinct investors
By Saritha Rai, Bloomberg
July 9, 2019
When Walmart Inc. paid $16 billion for control of India’s e-commerce pioneer Flipkart Online Services Pvt. last year, the American retail giant got a little-noticed digital payments subsidiary as part of the deal. Now the business is emerging as one of the country’s top startups, a surprise benefit for Walmart from its largest-ever acquisition.
Flipkart’s board recently authorized the PhonePe Pvt Ltd. unit to become a new entity and explore raising $1 billion from outside investors at a valuation of as much as $10 billion, according to people familiar with the matter, asking not to be named because the discussions are private. The funding may close in the next couple of months, although the talks are not finalized and terms could still change, they said. The unit would then become independent with a distinct investor base, although Walmart-owned Flipkart would remain a shareholder. Walmart and Flipkart didn’t respond to emails seeking comment.
PhonePe -- which means “on the phone” in Hindi and is pronounced “phone pay” -- has grown into one of India’s leading digital payments companies. Its volume and value of transactions have roughly quadrupled over the past year as the country’s consumers adopt the technology to transfer money digitally to businesses and each other. PhonePe is gaining ground on Paytm, which leads the field and is backed by Warren Buffett.
PhonePe is an “underappreciated asset,” Edward Yruma, an analyst from KeyBanc Capital Markets, wrote in a recent research note. He estimated the business may be worth $14 billion to $15 billion, separate from Flipkart’s e-commerce operation...
Walmart remains the largest U.S. retailer, Amazon a distant second
by Kim Souza, Talk Business & Politics (AR)
July 9, 2019
Walmart often is seen as losing out to Amazon, especially in terms of share price and broad subscriber base. But there’s one metric where Walmart still commands a large lead over Amazon — sales revenue. A recent STORES Magazine Top Retailers list put Walmart in the No. 1 spot with $387.66 billion in annual U.S. sales and 5,263 stores.
Amazon, with some 100 million Prime subscribers, ranks second with revenue totaling $120.93 billion, and roughly 490 stores in the U.S., most of which are Amazon’s Whole Foods locations. Kantar, which compiled the report, notes Amazon is easily the most disruptive and influential force in the U.S. retail industry, but it’s still nowhere in Walmart’s league when it comes to store locations and sales revenue.
Kantar estimates brick-and-mortar still accounts for about 90% of total retail sales in the U.S., but e-commerce is growing at a much faster clip as many categories such as apparel and pet products have already shifted toward much larger online sales. While Amazon is believed to be most disruptive to the growth of Walmart.com sales for general merchandise, the explosion of online grocery is being led by Walmart through its online pickup service, which is now available in more than 2,500 store locations. Walmart is rolling the program out to 100 stores each week through the rest of the year, with a final goal of 3,300 stores offering the service.
Keith Anderson, senior executive over strategy and insight at Profitero, told Talk Business & Politics Walmart’s use of its store infrastructure to bring grocery shopping options to the masses is just one of the things the retail giant is doing right. He said Walmart’s cold supply chain is a huge asset it can leverage to try and stay ahead in online grocery.
A harder task for Walmart is how to grow non-grocery online sales. He said Amazon is the clear leader in marketplace sales – smaller retailers using Amazon’s platform – and under the guidelines of Walmart’s invitation-only policy it doesn’t look like Walmart.com will mount a significant threat to Amazon. Anderson said there does not have to be just one winner in online retail. He gives Walmart props for investing heavily and continually testing and trying to move the needle as consumers want convenience shopping options.
Kantar said its TOP 100 Retailer list hasn’t changed much in recent years in the first 10 spots, despite disruption in retail. One of the more interesting areas...
Walmart Has Already Lost Its Battle With Amazon
The retailer has adapted somewhat to meet the omnichannel challenge, but it's unwilling to fundamentally change how it operates.
Daniel B. Kline, The Motley Fool
Jul 10, 2019
Digital pioneers often lose a lot of money in the process of building the infrastructure that will eventually (they hope) allow them to produce profits. That's how Amazon (NASDAQ:AMZN) operated for years -- and while it's in the black now, thanks in large part to its cloud business, it continues to invest for the long term while forsaking larger short-term profits.
For a few years, Walmart (NYSE:WMT) seemed to be willing to follow a similar model when it came to e-commerce and omnichannel sales. After the retail giant paid $3.3 billion for Jet.com in 2016, it empowered Jet CEO Marc Lore to run its digital division, and integrate it into store operations.
That led to bold offerings such as free two-day shipping, in-store pickup kiosks for online orders, and curbside grocery pickup. Those innovations, however, did not come cheap, and with recent reports that forecast Walmart's e-commerce division will lose $1 billion this year on sales of between $21 billion and $22 billion, some within the company want changes.
What's happening at Walmart?
Traditional retailers like Walmart do not generally choose a strategy of losing money steadily in order to make a profit at some vague point down the line. Competing with Amazon, however, means doing that.
The brick-and-mortar giant still has much work to do in its effort to transform its stores so they can also serve as digital fulfillment centers capable of matching Amazon's new one-day shipping offer. Walmart has struggled to hit the mark on two-day shipping, and it only offers a few hundred thousand items for fast delivery, compared to the more than 100 million available via Amazon Prime.
Continuing to compete with the e-commerce leader means continuing to lose money, and Vox has reported that Lore is under increased scrutiny from CEO Doug McMillon and the company's board. Lore, meanwhile, has made it clear to Walmart's leadership that success on this front will require not just modifying the chain's stores into e-commerce hubs, but also adding more fulfillment centers.
Amazon currently has 110 U.S. fulfillment centers; Walmart has just 20, and its stores, while large, lack the inventory diversity to compete with Amazon's product selection. Both are solvable problems -- if the company is willing to invest.
"The problem is that building the online version of the Everything Store requires millions more products, and that means two things that Walmart's current infrastructure does not support: dozens more e-commerce warehouses and a lot more merchants and brands selling through Walmart.com," wrote Vox's Jason Del Rey.
Basically, Lore knows what must be done to achieve his goals, but has run up against a traditional retail mentality that abhors operating losses. This is probably not a battle he has any chance of winning, and based on a series of recent corporate moves that included integrating Jet.com's employees more closely into Walmart's main digital operations (and some top executives leaving), the war may already be lost.
It takes resolve ...