US retail giant Walmart has expressed satisfaction over the performance of its Indian e-commerce unit Flipkart and digital-payments unit PhonePe, as e-commerce accounted for 12% of its international sales in the fourth quarter that ended on January 31. Apart from Flipkart, online grocery delivery units in several markets also contributed to international sales.
The US company said international sales had grown by 2.3% to $33 billion, despite a disruption in Chile that negatively affected operating income by $110 million. In his post-earnings call, Walmart chief executive officer Doug McMillon said, “The way Flipkart and PhonePe are scaling is impressive.”
The company claimed that Flipkart has more than a billion visitors a month, with monthly active customers growing by 45% in the past year and transactions per customer increasing by 30%. The Indian e-commerce unit reported a record turnover during last year’s BigBillionDays sale event, but Walmart did not disclose the numbers.
Walmart International CEO Judith McKenna said the performance of its Indian business units – Flipkart, PhonePe and fashion retailer Myntra – was in line with the company’s expectations. She said the engagement with Flipkart continued to grow as Indian customers became increasingly comfortable with the convenience e-commerce provided.
She said Flipkart was building innovations tailored for the Indian market, including voice-assisted transaction capabilities in vernacular language and fintech constructs to increase access to credit and online affordability options for shoppers. This is helping the company tap the small-town markets.
As for PhonePe, she said that though the payments platform is barely three years old it has 200 million registered users and 20 million active users and that nearly 500 million monthly transactions take place, covering 10 million merchants. PhonePe took two years to reach the billion-transactions mark, but by the end of its third year it had crossed 5 billion, she added.
Walmart acquired Flipkart in a $16 billion deal in August 2018 and is locked in a battle with US rival Amazon for dominance in India’s online retail market. The US retailer is betting big on Flipkart and scaling back its brick-and-mortar operations in India.
Last month it announced closure of the largest warehouse in India, in Mumbai, and halted new store expansion. This also resulted in layoffs at various divisions. Walmart entered the Indian retail market a decade ago but has been facing tepid sales and is yet to turn profitable.
Walmart partnered with Bharti Group in 2007 for the wholesale business and in 2013 it decided to go solo after buying Bharti’s 50% stake. The company now wants to either sell its physical stores business in India or consolidate its operations with Flipkart.
Meanwhile, Flipkart has formally shut down Jabong, its second fashion apparel unit, and merged it with Myntra. According to McKinsey, the Indian clothing market will be worth $59.3 billion in 2022, making it the sixth-largest globally. However, online accounts for less than 10% of organized apparel retailing. Fliparkt acquired Myntra in 2014 and Jabong two years later, controlling about 70% of the market.