Walmart has won a rare eCommerce victory over Amazon thanks to its Indian business.
As the Financial Times (FT) reported Saturday (May 20), Walmart’s $16 billion purchase of majority ownership of Indian online retailer Flipkart in 2018 was initially criticized, but Walmart has been vindicated.
“Did Walmart overpay for Flipkart at that time? Yes. But were they able to get value for their money in the subsequent years? Yes,” Abhishek Goyal, co-founder of data firm Tracxn and a former executive at Accel Partners, Flipkart’s first institutional investor, told the FT.
“If you look at the global markets, there was no other mature eCommerce company that existed which could help Walmart compete with Amazon. Flipkart was the only viable asset.”
The report, citing Bernstein research, says eCommerce sales in India are projected to reach $135 billion by 2025, triple the amount from 2020. While the Flipkart deal has established Walmart as an industry leader in India, the report notes that both it and Amazon have lost market share to homegrown companies like Reliance Industries and the Tata Group.
According to the FT, Flipkart’s market share last year was 48% to Amazon’s was 26%, with Flipkart taking in $23 billion in gross sales in India during 2021, compared to $18 billion to $20 billion for Amazon.
The news comes days after Walmart reported earnings that show the company’s eCommerce sales overall up 27%.
Speaking during an earnings call, John Rainey, the company’s chief financial officer said that Walmart’s expansion of its online marketplace in the U.S. — where seller counts grew 40% year over year — comes as the retailer is adding “higher-profile, in-demand brands that our customers are searching for but not typically distributed at Walmart, elevating our profile as a digital shopping destination.”
On the call, Rainey also noted Walmart’s eCommerce growth in India, as Flipkart scales, “growing first-time eCommerce customers and expanding its reach in Tier 2 and Tier 3 cities.”
John Furner, president and CEO, Walmart U.S., said on the call that the growth of its marketplace seller base has helped fuel eCommerce growth as there is a greater “assortment delivered in one or two days. And we see a pretty significant increase in conversion rates when a seller is using fulfillment services and can deliver within two days.”
In the eCommerce space, he said, there’s been demand for general merchandise, apparel and some home furnishing categories. Walmart’s marketplace traction has been mirrored in the data from Amazon, where PYMNTS’ earnings coverage pointed out that third-party sellers were tied to just about 60% of the company’s sales.