“Both businesses have consistently delivered against our expectations,” said McKenna, during a meeting with the investment community, on Thursday night.
The Bentonville-based company (in Arkansas) is locked in a battle with US rival Jeff Bezos-led Amazon
and Mukesh Ambani-owned Reliance’s JioMart
for dominance in India’s online retail market through Flipkart, which it bought for $16 billion in 2018. Digital payments giant PhonePe
also came to Walmart
as part of the acquisition.
Last July, Walmart
led a $1.2-billion round in Flipkart, valuing the e-commerce firm at $24.9 billion. Also, PhonePe recently raised $700 million in primary capital at a post-money valuation of $5.5 billion from the existing Flipkart
investors, including Tiger Global, led by Walmart, as part of a spin-off process. Both the companies
are now planning to go public in the US in the next 1-2 years, according to the sources.
Flipkart’s gross merchandise value (GMV) was impacted by the 53 day shutdown in the first half of the last year. But the business rebounded and exited the fourth quarter with strong momentum, delivering GMV growth, roughly double that of the full year.
“This is a credit to the resilience and the agility of our (Flipkart) CEO Kalyan (Krishnamurthy) and his team, who are able to pivot and continue to drive growth recognizing the role that they have to play in serving customers,” said McKenna. “At the same time, they strengthened the core business to be more resilient. That agility is not surprising to us because Flipkart is a tech company with customers at its heart.”
Flipkart is a rapidly expanding e-commerce platform with a growing suite of bundled services. She said it has a market-leading position in categories like fashion, electronics and appliances, and has a promising ad-tech and wholesale businesses.
“We believe that Flipkart is positioned to win India's e-commerce future,” said McKenna.
Krishnamurthy of Flipkart told McKenna that India has 1.4 billion people out of which 34 per cent are millennials. By 2030, there is an estimate that this young population of millennials and Gen Z will be 75 per cent of the total population. About 700 million Indians are digital today and the ‘Digital India’ vision of the Government of India has played a key role in this.
“So you have a unique combination of a big market, completely digital, getting wealthier and very young,” Krishnamurthy told McKenna. Talking about the e-commerce opportunity in India, Krishnamurthy said earlier the market size was estimated to grow to about $60 billion by 2025, but according to the latest estimate, it is expected to grow to around $100 billion. “That is the real opportunity we're looking at in India today.”
Also, Unified Payments Interface (UPI) which was launched in the country in 2016 has enabled extraordinarily rapid growth. McKenna said UPI value of transactions is now equivalent to 15 per cent of India's Gross domestic product (GDP).
“That growth is remarkable and as the market leader in UPI transactions, PhonePe is enabling access and inclusion for hundreds of millions of Indians, right from their phones,” said McKenna.
PhonePe – which competes with players, such as Google Pay, Paytm and Amazon
Pay – recently crossed the 275-million registered user milestone. It has over 100 million monthly active users generating over 1 billion digital payment transactions in January alone. It is targeting to surpass 500-million registered users by December 2022. Sameer Nigam, founder and chief executive officer at PhonePe, said the company’s annualised TPV (total payment volume) run-rate has crossed $300 billion. “We hope to become India's most comprehensive financial services platform,” Nigam told McKenna.