In a strategic move to cut costs and enhance supply chain resilience, Walmart, the world's largest retailer, is significantly increasing its imports from India while reducing reliance on China, according to data from Import Yeti shared with Reuters, as reported by the news agency on Wednesday (November 29).
The figures reveal that between January and August of this year, Walmart imported a quarter of its US goods from India, a substantial increase from just 2% in 2018. Concurrently, the retailer's reliance on China dropped from 80% in 2018 to 60% during the same period this year.
However, China is still Walmart’s biggest country for importing goods.
Andrea Albright, Walmart's Executive Vice President of Sourcing, emphasised the need for supply chain resiliency, citing the rising costs of importing from China and escalating political tensions between the United States and Beijing. "We want the best prices. That means I need resiliency in our supply chains. I can’t be reliant on any one supplier or geography for my product," Albright stated.
Walmart, however, clarified that the bill of lading data provides a partial picture of its sourcing activities and creating redundancy does not necessarily indicate a reduction in reliance on any specific market. The company nonetheless acknowledged India's emergence as a key component in its efforts to diversify manufacturing capacity.
Since acquiring a 77% stake in Indian e-commerce firm Flipkart in 2018, Walmart has accelerated its growth in the country. The retailer committed to importing $10 billion worth of goods from India annually by 2027, and it remains on track to achieve this target, Albright said.
Walmart is importing a diverse range of goods from India, including toys, electronics, bicycles, pharmaceuticals, packaged food, dry grains, and pasta. India's rapidly-growing workforce and technological advancements make it an attractive destination for large-scale manufacturing, factors that played a crucial role in Walmart's decision to shift focus, she noted.
Earlier, Walmart CEO Doug McMillon's meeting with Indian Prime Minister Narendra Modi in May underscored the company's commitment to supporting India's manufacturing growth. Amazon, Walmart's rival, also announced its intention to target merchandise exports worth $20 billion from India by 2025.
The rising cost of shipping goods from China, coupled with escalating labour costs, has contributed to the shift in Walmart's sourcing strategy. Supply chain experts point out that sourcing from mainland China has become less competitive due to increasing labour costs compared to other manufacturing centres.
Walmart's strategic shift is not limited to India alone, as Pakistan and Bangladesh have also benefited from the retailer's strategy, expanding as suppliers of home and apparel products.
The COVID-19 pandemic exposed weaknesses in global supply chains, prompting companies like Walmart to diversify their sourcing locations to avoid over-reliance on a small number of markets. Walmart's move reflects a broader trend among large US companies seeking to mitigate risks and ensure a stable supply chain amid geopolitical uncertainties.
With inputs from Reuters
