Walmart buys its way into India, foreshadowing an impending Asia retail war

A retail war is brewing in Asia, and it’s starting to mirror current geopolitical tensions. Walmart recently announced that it would be spending $16 billion to acquire 77 percent of Flipkart, India’s largest e-commerce company. India’s sheer size and rapidly growing economy has made it an enticing battleground for companies from the U.S. and China. With this acquisition, Walmart is signaling it will fight for a dominant position in a region in which China’s Alibaba is already heavily invested.

South and Southeast Asia have some of the biggest potential for future consumer spending as economies across the region grow. India is perhaps the most coveted market because of its size. Chinese companies have been fighting to make headway in India for years. Xiaomi is perhaps the biggest success story, which is now India’s largest smartphone vendor two years after launching in the country.

Consumer spending surpassed $285 billion in the fourth quarter of 2017 in India, a 5.5 percent increase year-over-year.

Since India is the elephant in the room, Walmart’s Flipkart acquisition is a conspicuous leap into Asia’s e-commerce market. India isn’t the only important market, though.

Alibaba has long been an investor in Singapore’s Lazada. In 2016, Alibaba acquired a controlling stake and it now operates in six countries across Southeast Asia. Alibaba also recently acquired Pakistan’s Daraz Group, an e-commerce company operating in multiple Souith Asia countries. Flipkart doesn’t have that kind of footprint. India alone is big enough to keep Flipkart preoccupied for many years.

Unlike Lazada, Flipkart has chosen to expand within one country by focusing on different verticals. It acquired a book discovery platform and a digital content delivery platform, among other businesses. This strategy is similar to Amazon’s, which expanded into digital content like ebooks and videos and bought Goodreads, a site for readers to share book reviews.

That alone is enough to appeal to Walmart, which has long tried to compete with Amazon in e-commerce and come up short. Now that Walmart is buying a dominant position in India, it can learn from Flipkart before it tries to expand to other markets.

Whether Walmart expands under the Flipkart brand or its own may depend on what kind of image it wants to project in new markets. The biggest markets, though, are the ones in which Lazada already operates: Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam. (See how consumer spending has grown in these markets.)

The differences between Flipkart and Lazada already highlight a different approach to e-commerce that could impact the success of each company. Flipkart’s website relies on a more minimal but organized appearance with lots of white space, hiding products behind organized menus.

Lazada, on the other hand, already resembles its sister company Taobao. It’s a hectic array of goods splashed across the front page, highlighting sales and discounted goods. One section is even dedicated to hot-selling products on Taobao.

One approach seems better suited to help users find what they need, the other for getting consumers to spend as much as possible.

There’s likely room for both approaches, but some markets will gravitate more towards one than the other. Walmart certainly has a lot of catching up to do, but for the first time, Alibaba might have serious competition in the region ready to pour resources into New Retail.

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