Walmart’s International Expansion Continues Albeit Competition

Despite being largely known as an American retailer, more than half of Walmart’s total stores are located outside the United States. Currently Walmart has operations in 28 countries with two of the retailer’s most important markets being India and China. In China Walmart operates 424 retail outlets while in India it has 20 stores. This pales in comparison to the number of Walmart stores in the United States – 4,752. In the last couple of years however Walmart has been on an expansion spree in both markets.

The first Walmart Sam’s Club and Supercenter in China was opened in Shenzhen 22 years ago. Walmart’s presence in the world’s most populous country continued to grow despite facing stiff competition from the likes of Sun Art and Suning. The competition grew fiercer when Chinese online retail giant Alibaba acquired stakes in supermarket chain Lianhua, Sun Art and Suning as well as outrightly buying InTime, a department store operator.

JD.com stake

The first online retail operation by Walmart in China was its acquisition of Yihaodian, an e-commerce site, but the big box retailer failed to gain traction. Walmart later sold assets in Yihaodian and used the process to purchase a stake in JD.com, the No. 2 online retail firm in China after Alibaba. Initially Walmart’s stake in JD.com was 5% but has since then grown to 12%.

In India on the other hand Walmart’s first retail outlet was opened nine years ago in Amritsar. At the moment all the 20 retail outlets that Walmart operates in India use the Best Price brand name. Compared to the strides Walmart has made in China, the big-box retailer has taken baby steps in the world’s second most populous country. Recently however there were reports that Walmart was planning to acquire a stake of between 15% and 20% in e-commerce firm Flipkart.

Online profitability

With regards to sales, Walmart’s international revenues were approximately 24% of the retailer’s topline compared to 64% for the U.S. business. In both its international and domestic operations sales grew at annual rate of 4%.

This coincides with reports indicating that the big box retailer is urging its vendors supply more products that cost $10 and above in a bid to make its e-commerce business profitable. Walmart communicated this to suppliers in meetings that were held last week.

“Walmart has started to understand it cannot make money if they offer the lowest prices online on every item and then spend $4 or $5 trying to ship it over,” a supplier who attended the meetings said.

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