A decade ago, Walmart acquired a controlling stake in Massmart to capitalize on Africa’s rapidly growing consumer market. Its investments haven’t yet paid off due to challenges including the commodities crash in 2014 and the recent pandemic restrictions.
Walmart however doubled down on its investment in Massmart in 2022 by buying the remaining 47% of the retailer for 6.4 billion South African rand (about $358 million). The acquisition granted Walmart greater control over Massmart and enabled the company to be more aggressive in driving change.
Africa presents unique challenges for Walmart, including the relatively high cost of mobile data and the lack of basic infrastructure for last-mile delivery, per the report. Additionally, the South African retail market is highly competitive, with numerous established players.
To address these challenges, Walmart has injected money into Massmart and appointed its own executives to key roles, according to the Wall Street Journal.
Walmart has increased its number of tech specialists from 28 in 2021 to nearly 300, focusing on software development, product operations, and analytics.
Walmart has also implemented its proprietary software, which optimizes the picking, packing, staging and distribution of online orders at Massmart’s Makro chain of wholesale stores. This integration of technology aims to enhance efficiency and improve the customer experience.
The Bigger Picture
Walmart may have to get ready to contend with new competition as there are reports that Amazon is gearing up to launch an Amazon South African marketplace this year. Marketplace is Amazon’s e-commerce platform that enables third-party sellers to sell new or used products directly to consumers on a fixed-price online marketplace alongside Amazon’s regular offerings.
This could add to the challenges that Walmart is already facing in South Africa.