Walmart is using a Flipkart fashion brand to test expansion in Canada

Walmart, like Amazon, is facing challenges scaling in India. E-commerce rules that came into effect Friday bar foreign retailers from selling through local vendors in which they have an equity stake; as a result, thousands of products were removed from Amazon’s site. Flipkart, which sells many private-label brands, will be affected by the rules too, which prohibit one vendor’s retail sales from accounting for more than 25 percent of the overall sales of one marketplace by value in a fiscal year.

Since Walmart acquired Flipkart, the retailer has sought to restructure operations and integrate Flipkart’s technology to gain an edge in the Indian market. In October, it began rolling out Myntra private-label brands in Canadian Walmart stores. Walmart’s moves to scale Flipkart private-label brands offer another distribution channel given restrictions in India. Reaching out to the South Asian diaspora community in Canada is also a way for Walmart to test how Flipkart products will perform in other markets.

“They’re going to have to find ways of monetizing the Flipkart acquisition, and it shows their investors that they’re trying to leverage this new asset,” said Bruce Winder, co-founder of Toronto-based Retail Advisors Network. “Maybe Myntra is the beachhead, and then they may invite other [Indian] sellers to drive more volume.”

Myntra was established as an independent fashion e-commerce retailer based in Bengaluru, India, in 2007. It was acquired in 2014 by Flipkart for $280 million; it focuses on clothing, shoes and accessories. It has 14 private-label brands, and reportedly has aspirations to use Walmart’s e-commerce platform to become a global brand within a couple of years.

“India has great retailers and brands which can work in Canada and the U.S.; I don’t know if Walmart acquired Flipkart for that reason, but it’s definitely something they may want to do long term,” said Juozas Kaziukėnas, CEO of e-commerce research firm Marketplace Pulse. 

Amar Singh, senior analyst at Kantar Consulting, said the online offering makes the placement of Myntra products in Walmart stores more efficient, enabling in-store pickup of online orders. Since South Asian-origin Canadian populations tend to cluster around urban centers that are well served by Walmart’s physical store infrastructure, it’s a good strategic move for the retailer, he said.

“It’s a point of differentiation for Walmart compared to Amazon because they can concentrate on certain demographics — they can use the stores in Canada to target multiple ethnicities, like, for, example, the South Asian community in the greater Toronto area,” he said.

Acquisitions like Flipkart play to Walmart’s global ambitions, allowing it to use physical stores as distribution points to power inventory diversification plans, boosting its competitive position versus Amazon and eBay.

“[Myntra] could be a testing ground for more global infrastructure for e-commerce,” said eMarketer e-commerce and retail analyst Andrew Lipsman. “As Walmart makes more of a global play, cross-border commerce and global logistics are going to be an area of opportunity for them longer-term.”