KEY POINTS
- A quarter of Walmart’s U.S. imports between January and August were from India
- The share of Indian imports stood at 2% in 2018
- China still remains Walmart’s main source for shipments to the U.S.
Walmart is importing more goods to the U.S. from India as it aims to diversify its portfolio away from China and cut costs.
The world’s largest retailer has increased the share of U.S. imports from India in recent years, while its Chinese imports have significantly dipped, according to data from Import Yeti shared with Reuters.
A quarter of Walmart’s U.S. imports between January and August were from India. It was just 2% in 2018.
China still remains Walmart’s main source for shipments to the U.S., with a share of 60% of imports between January and August. In 2018, the share was 80%.
“We want the best prices,” Andrea Albright, Walmart’s executive vice president of sourcing, told Reuters. “That means I need resiliency in our supply chains. I can’t be reliant on any one supplier or geography for my product because we’re constantly managing things from hurricanes and earthquakes to shortages in raw materials.”
Walmart said the data paints a partial picture, noting that creating redundancy “does not necessarily mean” it was cutting its dependency on import markets.
“We’re a growth business and are working to source more manufacturing capacity,” said the retail giant.
Nevertheless, India is an important player in the retailer’s vision of building more manufacturing capacity and a source for a wide variety of products, Albright said.
Walmart imports toys, electronic bicycles, pharmaceuticals, packaged food, dry grains and pasta to the U.S. from India, she added.
In 2020, Walmart announced it would triple its exports from India to $10 billion per year by 2027. Walmart currently imports around $3 billion worth of goods from India each year and is on track to hit the $10 billion mark in time, Albright said.
India is increasingly seen as an attractive alternative to China as Western governments encourage companies to “de-risk” themselves amid the changing geopolitical landscape.
“Sourcing from mainland China has become less competitive because of rising labor costs versus other manufacturing centers,” said Chris Rogers, research analyst at S&P Global Market Intelligence’s supply chain analysis group Panjiva.
The newfound confidence in India has led a number of global companies to show interest in moving operations to the South Asian country or to increase imports from there.
U.S. importers also realized the risk of being overly dependent on a small pool of sourcing markets after the COVID-19 pandemic exposed the weaknesses of such a situation.
“Planning for a geopolitical event is like planning for a hurricane,” said Albright. “What I can control is where my product is coming from and how do I make sure that Christmas still happens if something happens in our supply chain.”
