E-commerce could be the key to emerging markets

With Walmart planning to do an eBay in India, the bricks and mortar model in emerging economies is looking broken.

by Rachel Savage
Last Updated: 11 Aug 2014

Emerging markets have been proving a tough nut for many Western companies to crack - everyone from Tesco to Mulberry has found pinning down the Chinese consumer is like trying to pick up rice with chopsticks, while India, despite the advantages of widely-spoken English, remains an impenetrable jungle of red tape. The news that Walmart is quietly building an Amazon and eBay-esque online marketplace to launch in India in the next few months is definitely one to watch then.

India still bars foreign retailers from selling their own products online (although Amazon et al have been pushing the Indian government to relax the rules for a while now), hence Walmart’s plan to create a platform for third party vendors and collect a commission from them, reported by India’s The Economic Times.

Perhaps more importantly, selling in the ether will allow Walmart to circumvent the byzantine maze of licences needed to open up bricks and mortar stores in India, which almost always require bribes. The supermarket giant was engulfed in corruption allegations in the country in 2012 and had to unceremoniously put its expansion plans on hold, including breaking ties with local partner Bharti Enterprises in October.

Indian e-commerce is getting hotter than a vindaloo curry at the moment. The market is set to treble by 2016, although it will still only be worth around £5bn, according to Crisil Research.

eBay clearly smells the money too - it invested $134m (£80m) in Indian online marketplace Snapdeal last week and predicted last year that 12% of its sales would be come from the BRICs (Brazil, Russia India and China) by 2015.

Elsewhere in Asia, Walmart has also struggled in China, taking the best part of two decades to realise that consumers there prefer small local stores and international brands to its large shop, cheap product model. As more Chinese consumers take to the internet, the supermarket, which bought web retailer Yihaodian in 2012, might even try to do an eBay in the east too.

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