Walmart Brasil is taking an unconventional route to retail transformation, closing down its e-Commerce site and converting 20 of its underperforming hypermarkets into wholesale stores.
The decision caps years of efforts that never really took off since Walmart launched the Brazilian e-Commerce division in 2011. While Walmart is a top e-Commerce player in the U.S., Walmart Brasil deals with tougher competition from local retailers such as B2W, Via Varejo and Magazine Luiza SA.
In 2017, the retailer discontinued direct sales, running instead only a marketplace for third-party sellers that had opened in 2015. While Walmart Brasil has struggled, Amazon has sought to make more headway in the region, recently launching a Sao Paolo fulfillment center that will enable the e-Commerce giant to sell directly to Brazilian consumers.
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As part of the decision to exit e-Commerce, Walmart Brasil laid off 70 of the 90 employees working for its marketplace platform, with the remaining 20 fully dedicated to managing ongoing orders.
It should be noted that Walmart no longer has a controlling stake in the business; the company sold an 80% stake in the Brazilian operation to Advent International, a private equity firm, in June 2018. Walmart has made major realignments to its international business, acquiring a 77% stake Indian e-Commerce giant Flipkart in May 2018 for approximately $16 billion.
Additionally, Walmart sought to exit the UK with a sale of British supermarket Asda to Sainsbury’s, but the UK’s chief competition regular blocked the merger based on ‘extensive competition concerns’ related to potential price increases. In response, Walmart International CEO Judith McKenna revealed that the company is seriously considering an IPO for Asda.
