Hedging your bets: How globalisation can enable manufacturers to grow sustainably amid Covid
Companies that were able to conduct business globally, saw more revenue come in from overseas markets than India and thus experienced significantly lower disruptions in the revenues.
“There are local closures in place at the moment (in India), but that will have a short-term impact (on the business),” said Walmart International President and CEO Judith McKenna.
Flipkart had launched operations of Flipkart Wholesale in September last year with the acquisition of the wholesale business of Walmart in India. (Image: Reuters)
Amid recent speculations over the timeline for Walmart-owned Flipkart’s impending initial public offering (IPO), Walmart International’s President and CEO Judith McKenna has now clarified that there is “no specific timeline on that.” Speaking at the Deutsche Bank’s virtual DbAccess Global Consumer Conference 2021, McKenna said, “It’s (Flipkart IPO) not an output, it’s not a target for us to do that. But if we build a strong business, and we continue to do the things that we need to do to ensure that long-term and sustainable growth, that is a possible route that we would consider in the future, but certainly no specific timeline on that.”
Flipkart is currently in talks to raise $3 billion from SoftBank Group and other investors and is aiming for a valuation of around $40 billion ahead of its IPO as soon as the fourth quarter of this year as targeted by the company, Bloomberg had recently reported. Flipkart Internet — the marketplace arm of Walmart-owned e-commerce company Flipkart – had reported a 32 per cent jump in revenues to Rs 6,317.7 crore in FY20 up from Rs 4,803.9 crore in FY19 wile losses had also increased 19 per cent to Rs 1,936.6 crore in FY20 from Rs 1,624.4 crore in FY19, regulatory filings from Tofler had showed. Likewise, its wholesale arm Flipkart India Private Limited had reported a 12 per cent increase in its FY20 revenues to Rs 34,610 crore from Rs 30,931 crore in the last financial year. Its losses, however, had decreased 18 per cent to Rs 3,150 crore in FY20 from Rs 3,835 crore in FY19.
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Even as revenues for the company have improved over the past few years, the path to profitability for Flipkart is still not defined even as that’s the eventual goal. In the course of profitability for all of Walmart’s businesses, the company would continue to invest in them including Flipkart to ensure that “We’re meeting customers where they need us to be.” Mckenna said that could make the profitability path a little longer though. “Sometimes that does need some investment and might make that curve a little longer, because once we’ve got it in place, we can really double down on things like AdTech and financial services to people which are these profit streams that that can flow into.”
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Walmart International’s top executive also touched upon the business-to-business vertical of Flipkart called Flipkart Wholesale. The business was launched in September last year with the acquisition of the wholesale business of Walmart in India that operated 28 Best Price cash-and-carry wholesale stores offering nearly 5,000 items. In February this year, Flipkart Wholesale had also expanded to the grocery segment, which is also among the focus areas for the company now. Flipkart already had its B2C grocery delivery business Flipkart Supermart that didn’t see as much as success its competitors including JioMart, Grofers, etc.
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“One of the investment areas, though, that we’re making against that is in the wholesale business, which is serving the small, medium sized businesses…but then also you have a nascent grocery business. Grocery penetration in India is massively low, accelerated through Covid. We’re just expanding our office there and it’s one of the few areas where Walmart can really help and support in terms of the learning for working with that,” McKenna added.
While Covid had impacted the sale of non-essential goods via e-commerce platforms such as Flipkart last year due to delivery restrictions, however, that was to an extent offset by growth in the grocery segment. That’s another reason for Walmart’s focus on the grocery market. “There are local closures in place at the moment, but that will have a short-term impact…If there’s one area that I think we will see a greater acceleration in is grocery for India. That’s why we’re really thinking about that as well,” McKenna added buoyed by India’s focus on digital penetration through initiatives such as UPI.
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