The last time we were on this platform all the buzz was about Flipkart’s acquisition of Snapdeal. At that juncture, we introduced the idea of Mr. Fat Bug^TM, a group of global and homegrown super-consolidators. India’s answer to GAFA (Google, Apple, Facebook, and Amazon) and BAT (Baidu, Alibaba, and Tencent). While the Snapdeal and Flipkart deal fell through, Flipkart has managed to stay in the news this time at the end of the deal. All this means we have to now find a way of accommodating the ‘W’ in our acronym. Nonetheless, Mr. Fat Bug has made its presence felt over the past year none more so than Reliance Jio acquiring Saavn and Embibe.

But this isn’t the time to be talking about Mr Fat Bug, this is about the W that we must now fit into Mr Fat Bug^_TM.

For a long time now Walmart has tried to establish a foothold in India without much success thanks to unsupportive legislations. Along the way, Walmart has demonstrated a willingness to be adaptive to building a wholesale cash and carry business despite its obvious strength in selling directly to customers offline. The India endeavors haven’t always gone to plan as evidenced by the 2013 divorce with Bharti. However, Walmart has persisted and may have finally found a way of having a larger say in the Indian market.

Walmart is undergoing a metamorphosis; we are witnessing the emergence of the 21st Century Walmart.

This is not evident anywhere else more so than on their redesigned website. The new walmart.com is an e-commerce website masquerading as a lifestyle website with highly localised and personalised product recommendations. The transformation has so far been driven by an acquisitive strategy. In 2016 they acquired Jet.com for $3.3 billion not as much for their product and customers as it was for the leadership team. The goal was to bring a cultural shift. Post-acquisition Walmart encouraged Marc Lore, founder of Jet, to maintain the entrepreneurial spirit at Jet and transport that ethos to Walmart. This was also the key to Marc Lore selling his company to Walmart. Having founded and sold two companies in the past, one to Amazon for $500 million, Marc was clear on wanting to continue to be involved with Jet post the sale and hence Walmart made for the perfect partner. Post the Jet and Walmart merger, Marc, as head of the Walmart U.S. e-commerce business, made a concerted effort to focus on categories in which Amazon was not dominant and in which customers were becoming more comfortable shopping online.

Doing what he calls ‘swimming upstream’. These included fashion, grocery, and home décor. To this end, Walmart has not been shy to invest across new tech-based business models as is evident from their acquisitions of Shoes.com which was a marketplace, Moosejaw an online multi-brand outer-wear store and ModCloth and Bonobos both of which are made on the internet brands. Marc Lore has spoken extensively of digitally native brands and their direct connection to consumers. There is no doubt that was a huge attraction of each of the companies acquired by Walmart.

That’s the opportunity in India. While Walmart will continue to keep Flipkart’s lead in electronics and fashion, it will quickly try to dominate categories not already owned by competitors.

Walmart’s founder, Sam Walton, famously said ‘Opportunity lies in the opposite direction’. There are plenty of as yet young categories in India that are there for the taking including but not limited to FMCG, jewelry, beauty, health, etc while competition has begun to gain a toehold there is still a long way to go to establishing clear leadership.

Will we see the emergence of an Indian challenger? Walmart has publicly stated that when consumers shop both online and offline they shop almost twice as much than consumers who shop exclusively online. Amazon’s recent acquisition of Whole Foods and launching of physical unmanned stores are revealing of their opinions of offline retail. With regulation still unsupportive of foreign companies in offline multi-brand retail, it remains interesting to see how these companies will try to plug that gap. That is also the opportunity for entry of the Indian challenger, possibly an existing offline retailer, to take the plunge online.

This is also great news for young Indian brands across FMCG, retail, etc. There has never been a better time to build a direct-to-consumer brand. Distribution has for long been one of the biggest challenges for entrepreneurs.

Traditionally large consumer businesses have owned their distribution networks and been able to launch brand after brand through these networks.However, this model has lead to little innovation and made it hard for upstarts to compete with the incumbents.

Walmart’s entry into India in earnest is going to be another shot in the arm for made-on-the-internet brands. Horizontal and vertical e-commerce platforms will try to woo these brands to tie them into exclusive partnerships and with Walmart’s entry, there exists a buyer who isn’t afraid to put their money where their mouth is and acquire brands they believe in. However, brands will have to be able to innovate around one of product design, distribution or customer acquisition to stand out from the noise.

Historically, Walmart has been famous for frugality and being able to drive down procurement costs by squeezing its suppliers, most of who were dependent on Walmart for building their brand. In the pre-internet era, advertising and distribution were the two areas of focus to build a successful brand.Today the tables have turned, content, community and to a much smaller distribution are the keys to be able to build brands.

In many ways, the upstarts may well be the crutches on which Walmart, other e-commerce platforms and large offline retailers across categories look to acquire customers and build their brand in India. The pace of acquisitions is about to take off.