Walmart aims to get it right in South Africa

Walmart’s global expansion plans haven’t always proceeded smoothly, but the US retail giant seems intent on making a success of Massmart, the South African retailer it took full ownership of earlier this year.

Context

Since taking a majority stake in Massmart back in 2011, “Walmart’s African journey over the last decade has been a string of missteps,” Reuters observes. But while the US company has offloaded less-than-successful investments in other parts of the world – the UK and Japan, for example – it continues to see opportunity in Massmart and in Africa’s one billion consumers and growing household spending.

What’s the plan? 

Walmart has indicated its strategy “consists in creating and expanding an e-commerce offer” for three of Massmart’s formats – Game (general merchandise), Builders (hardware chain) and Makro (wholesale merchandiser). 

Already, Massmart has started leveraging Walmart’s group-wide e-commerce infrastructure, Reuters reports, while a couple of recent acquisitions – on-demand marketplace OneCart and delivery company Wumdrop – point towards how the strategy is developing. 

Analysts, investors and sources contacted by Reuters suggest Walmart will first rebuild Massmart’s physical retail space before building out its e-commerce capabilities to compete with Amazon, which is expected to enter the market as part of its own expansion plans. 

Where the problems lie

While brands will be watching progress closely, the e-commerce experience in Africa is very different to what Walmart and Amazon are used to in their home market. The likes of payments, logistics, and last-mile delivery are hurdles that will need to be overcome if this shopping channel is to grow and account for more than the current 2.2% of Massmart’s sales.

Sourced from Reuters

[Image: Walmart]