Walmart’s US business is its most productive, bringing in $80.6 billion in net sales in its fiscal Q3 2019 (ended October 26, 2018). But its international segment is still incredibly valuable, racking up $28.8 billion in net sales that quarter. Despite this, Walmart has been running into some issues overseas.
Business Insider Intelligence
- The merger of Walmart’s UK supermarket chain Asda with fellow chain Sainsbury’s may be blocked due to competition concerns. The deal, originally reported in April 2018, would see Walmart take a 42% share in the new company and receive about £2.98 billion ($4.1 billion), taking a noncash loss of approximately $2 billion. It also would have resulted in the company taking a step back from the competitive grocery market. If the deal can’t be completed, Walmart may be able to find a private equity buyer, but it would force the company to reconsider its future presence in the UK, according to The Wall Street Journal.
- Flipkart, which Walmart invested $16 billion in, now has to contend with Indian regulations that target e-commerce companies with foreign investors. The new foreign direct investment (FDI) regulations affect companies’, including Flipkart’s, ability to offer discounts and exclusive products, and sell products through firms they own a portion of. Flipkart will survive these changes and potentially still thrive, but Walmart would surely prefer it not face new challenges that alter the high-value market it made such a large investment in.
Working out its international issues will be key to the future of Walmart’s rivalry with Amazon. Walmart seemingly wants to focus on foreign markets with high potential, like India, rather than those that are already competitive, like the UK and Brazil, but this effort is becoming complicated.
Like Walmart, Amazon has also invested heavily in international markets and continues to expand in new regions. For both companies, this strategy is important because the North American market, while incredibly valuable, is already competitive and offers lower growth rates than some emerging markets.
And for Amazon specifically, international markets are needed to boost growth for its Prime subscriber base, which is approaching saturation. If Walmart can succeed in high growth markets, especially those that Amazon is also in, it can propel its business to new heights and better compete with Amazon in the future.
- Amazon’s Q4 earnings reported record profit
- THE ONLINE GROCERY REPORT: The market, drivers, key players, and opportunities in a rising segment of e-commerce
- I tried Prime Now, the 2-hour delivery service that’s helping Amazon take over the grocery market — and I discovered a hidden flaw
Source: Business Insider