Walmart is launching a business-to-business ecommerce platform in India next month. It is expected to launch in the Indian cities of Lucknow and Hyderbad, according to Reuters.
Krish Iyer, Walmart’s chief executive officer for India, told Reuters that Walmart has 20 wholesale outlets in India, including these two cities, which will support its ecommerce services.
Iyer told Reuters it would look at rolling out the service to the remaining 18 outlets as well, but not for another six months.
In April, Walmart announced plans to open 50 more wholesale outlets in India in the next four to five years and start online operations targeting small shopkeepers. The company decided to launch the ecommerce platform after opting not toopen its own retail stores.
Scot Wingo, CEO of Channel Advisor, said the ecommerce side of Walmart’s business is one of the battlegrounds right now in India.
“It’s growing rapidly, said Wingo. added that Amazon has had a marketplace in India for about a year now.
Wingo said it didn’t surprise him that Walmart would open a marketplace in India, where eBay, Amazon, SnapDeal.com and FlipKart.com have already set up shop.
In February, SnapDeal.com raised $133 million led by eBay, on top of $50 million last year. FlipKart.com has been rumored to have raised $500 million.
Wingo said a lot of people in the retail industry see Brazil, Russia, India and China as locations with the biggest growth outside of the U.S. for ecommerce.
“If I am Walmart, I have to fight a multi-front battle with Amazon,” he said.
Wingo said while Amazon has a substantial lead in U.S. ecommerce, it is still day one in areas like India. For that reason, he said it is still “day one” in India, so Walmart is on more of a level playing field.
While Walmart has a marketplace in the U.S. that isn’t highly publicized, it does drive traffic through an invitation only approach, according to Wingo.
Eric Best, founder and CEO of Mercent, said some pretty big industry themes tie into the Walmart India marketplace launch, including omnichannel, cross-border ecommerce and B2B ecommerce.
Best said 2014 appears to be the year where U.S. companies are turning their attention to international markets, and B2B ecommerce is the next opportunity for major growth in the industry.
“I do think this wholesale model that Walmart is pursuing in India seems to address the risk they might otherwise be taking if this was a ground-up consumer play,” said Best.
Best said this allows Walmart to avoid starting from the beginning in terms of consumer awareness in the market.
In the first quarter Walmart’s ecommerce business grew faster than Amazon. According to first quarter earnings calls, Walmart’s ecommerce sales globally increased 27%. For Amazon, net sales globally increased 23%.
“Walmart has gotten serious about the ecommerce business, they are certainly investing heavily in ecommerce,” said Best.
Iyer told Reuters that the ecommerce service will be available only to its trader members. India restricts global online retailers from selling their products directly consumers.
Reuters reported that India could allow global online retailers such as Amazon Inc., to sell their own products directly to consumers beginning in July, lifting the restrictions that have held back competition.
Walmart has not announced any plans to sell directly to consumers through its ecommerce service.
Iyer told Reuters that Walmart’s wholesale stores currently cater to consumers within a 20-km radius and the ecommerce business will help the company serve customers from within a 40-km radius of its stores.