Flipkart and PhonePe continue to post strong growth in India: Walmart CEO

Topics Flipkart | PhonePe | Walmart

Doug McMillon, CEO and president, Walmart
Walmart International, the segment which includes the retail giant’s operations outside the US, reported net sales of $27.3 billion, a decrease of $2.5 billion or 8.3 per cent in the first quarter for FY2022. But the e-commerce sales increased 49 per cent.

Walmart International retained market growth of 5.1 per cent on constant currency. This was led by strength in India, Canada and China. 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 and financial services market through Flipkart and PhonePe.

“In India, Flipkart and PhonePe continue to experience strong growth,” said Doug McMillon, president and chief executive officer, Walmart on Tuesday evening, during its first-quarter earnings results.

Digital payments firm PhonePe which came to Walmart as part of the $16 billion acquisition of e-commerce firm Flipkart in 2018, has witnessed over 150 per cent growth in terms of annualised total payments value (TPV) run rate.

“At Flipkart, monthly active customers and users are key metrics and we are performing well,” said McMillon.

Flipkart recently also announced its proposed acquisition of Cleartrip, a leading online travel technology company. “This underscores our commitment to transform the customer experience through digital commerce,” said McMillon.

Flipkart is also adding other new capabilities including logistics and data storage. The Bengaluru-based firm recently formed a strategic and commercial partnership with the Adani Group, India’s largest multinational infrastructure company. The partnership has brought Flipkart a unique combination of logistics, real estate, green energy, and data centre infrastructure capabilities.

“Our growing base of customers means we need to add new capabilities including logistics and data storage,” said McMillon. “The partnership with Adani Group would help us just do that.”

Brett Biggs, executive vice-president and chief financial officer for Walmart, said Flipkart continues to perform well, driving strong and sustainable e-commerce GMV (gross merchandise value) growth.

“This (includes) strong monthly active customers and users,” said Biggs. He said this is despite the teams dealing with the pandemic challenges and the firm is serving amid Covid cases in India.

Biggs said the Covid-19 pandemic continues to create both tailwinds and headwinds for the business. Certain international markets continue to be negatively affected by the resurgence in the covid cases and related government restrictions for operations, particularly in India and Canada.

Due to the Covid-19 pandemic, McMillon said the past several weeks have been more challenging in some countries including India, Canada, Chile and South Africa. These are a priority for the company at the moment. Besides associates being a primary focus, Walmart is also investing resources to support the countries including helping people get vaccinated. McMillon said the situation due to the Covid-19 pandemic in India is tragic and the firm is supporting the country besides its own employees.

“In India, we're donating oxygen concentrators, PPE (personal protective equipment)  and financial support,” said McMillon. “In India, we're facilitating vaccinations for our associates and their households, and our Flipkart and PhonePe contractors. More than 200,000 people across the countries where we operate. We'll keep looking for more places to make a difference. This pandemic won't be over until it's over for everyone.”

The Covid-19 pandemic has accelerated the shift to e-commerce, with an increasing number of consumers shopping online at a higher frequency.

Walmart International’s growth was negatively affected by government-mandated restrictions in certain markets, according to Walmart’s first-quarter earnings results presentation.

Walmart International’s net sales were negatively affected by $4.2 billion or 14.1 per cent related to recent divestitures. The changes in currency exchange rates positively affected net sales by approximately $0.9 billion.

Walmart’s total revenue was $138.3 billion, an increase of $3.7 billion, or 2.7 per cent.

“This was a  strong quarter. Every segment performed well,  and we’re encouraged by traffic and grocery market share trends,” said McMillon. “Our optimism is higher  than it was at the beginning of  the year.”

He said in the US, customers clearly want to get out and shop. “We have a  strong  position  as our store environment improves  and e-commerce continues to  grow.”

McMillon said stimulus in the US had an impact, and the second half has more uncertainty than a typical year. “We anticipate continued pent-up demand throughout 2021,” he said. “Our results reflect the continued hard work  and  commitment  our associates  have shown throughout the pandemic.”

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