Marketing in Action Case: Real Choices at Walmart Walmart, the brick-and-mortar king of retailing, has become a major force in online shopping. Therefore, in looking for global expansion, it only makes sense that opportunities for online business growth are very attractive to Walmart. When businesses consider expanding into a new region of the world, the number of potential customers in the area is a major consideration. Perhaps that is why India, with its 1.3 billion people, is so attractive to Walmart. In 2018, the Indian retail market generated $800 billion a year in sales and was headed toward $1 trillion in the next two years, according to research firm Forrester. Online sales represented only about $20 billion of that amount. Betting on the growth of online retail in India, Walmart made a $16 billion investment in locally owned online retailer online retail in India, Walmart made a $16 billion investment in locally owned online retailer Flipkart. Most retail sales in India are through small individual mom-and-pop stores. Over the previous decade, Walmart had tried to break into the market, but those small store owners were able to influence government regulators to create limitations on Foreign Direct Investment (FDI) by international retailers. So far, Walmart's presence there had been limited to 21 Best Price wholesale member-only stores (with plans to add 50 more). The investment in Flipkart provided a way for Walmart to reach the massive Indian market. Flipkart was founded in 2007 by two college friends and former Amazon employees and began as an online bookseller. Understanding that many Indians saw paying online with credit cards as risky, Flipkart allowed buyers to pay cash when their order was delivered. The company was also known for its many delivery drivers on motorcycles with huge backpacks filled with merchandise In its 2017 fiscal year, Flipkart had net sales of $4.6 billion, a fraction of Walmart's $485 billion, but an impressive 40 percent of online sales in the country. Flipkart had more than 10 million customers and 100,000 sellers, and it made more than 500,000 deliveries every day. But Walmart wasn't the only U.S. online retailer looking to capture the Indian online market. Walmart's investment in Flipkart was, at least in part, to fend off rival Amazon who already had strong online sales in India. Amazon claimed they had the most downloaded shopping app in India and founder Jeff Bezos said the company planned to invest more in the Indian market. Amazon's online share of the Indian market was 31 percent (compared to Flipkart's 40 percent), a share that was realized with an investment of only $3 billion. Walmart's investment provided financial stability for Flipkart and a stronger presence for Walmart in India. The investment also positioned Walmart to move into brick-and-mortar outlets if regulatory limitations changed. The investment was also good news for Indian consumers who would benefit from an expanded Flipkart and the merchandising expertise Walmart would bring But everyone was not happy with the move. The Confederation of All India Traders representing 60 million businesses in India said the investment is "a clear attempt to control and dominate the retail trade of India by Walmart." Their fear was that the deal would create an uneven playing field and encourage predatory pricing. Others warned that the Walmart and Flipkart cultures may clash. Flipkart is" ... very aggressive and numbers driven," according to Flipkart seller Devita Saraf, with a "flexible, entrepreneurial energy. They are constantly working on acquiring new customers." Walmart "may know retail but may not know India. India is a complicated market. You have to have the right partners to understand the customer." Of course making the investment in Flipkart is just a beginning for Walmart's success in India. Walmart has to do more to fend off Amazon's threat for the online market and to influence regulations on foreign investment in brick and mortar. You Make the Call 2-35. 2-36. 2-37. What is the decision facing Walmart? What factors are important in understanding this decision situation? What are the alternatives? What decision(s) do you recommend? Wh are some ways to implement your recommendation? 2-38. 2-39