Walmart Brasil to Ditch E-Commerce, Focus on Brick and Mortar

May 13, 2019

FILE PHOTO: The main entrance to a Walmart store is pictured in Sao Paulo, Brazil February 14, 2018. REUTERS/Paulo Whitaker

BY GABRIELA MELLO

SAO PAULO (Reuters) - Walmart Brasil will close down its e-commerce operation in Latin America's biggest retail market to focus on brick and mortar locations, converting underperforming hypermarkets into wholesale stores.

Wholesale has become increasingly popular in Brazil as the country slowly exits from a harsh recession.

"The company is working in a new omnichannel strategy which will be later announced", Walmart Brasil said in a statement on Friday, without giving details. News of the decision was first reported by newspaper Valor Economico.

The move is likely to open room to local and international retailers currently focused on exploring still incipient e-commerce in Brazil.

Walmart's decision caps years of efforts that never really took off. It precedes the long-awaited launch of Amazon's fulfillment center, which will enable it to sell directly to consumers in Brazil.

Part of Walmart's struggles, had to do with tough competition from local players in the e-commerce segment, including B2W, Via Varejo and Magazine Luiza SA.

Walmart launched an e-commerce division in Brazil in 2011, selling directly to consumers. But by 2017, the retailer discontinued direct sales, focusing only on running as a marketplace for third-party sellers, which it had launched in 2015.

Walmart never disclosed how much online sales contributed to its top line in Brazil.

In mid-2018, buyout firm Advent International acquired an 80% stake in the Brazilian operation, unfolding a broad revamp.

By then, the e-commerce division was already in decline.

As part of the decision to exit e-commerce, the company laid off 70 of its 90 employees working for the marketplace platform, with the remaining 20 fully dedicated to manage ongoing orders.

Walmart's decision could be a boom for its competitors.

"Walmart's (e-commerce) operation has been shrinking for a while now, but we are prepared to direct their consumer traffic to Carrefour", Chief Executive Officer of Carrefour eBusiness Brasil, Paula Cardoso, told journalists on Friday in a call to discuss quarterly results.

In a separate statement, Walmart Brasil said it plans to convert 10 underperforming hypermarkets into wholesale stores Maxxi Atacado by the end of 2020. The first one was opened on May 9 in the city of Diadema, near Sao Paulo.

Another 10 hypermarkets will be converted into Sam's Club stores, the company said.

(Reporting by Gabriela Mello; Editing by Nick Zieminski)

Source: U.S.News