Flipkart’s limited operations during the nationwide lockdown “negatively affected” growth in its international e-commerce business, US retail giant Walmart told investors on Tuesday, counteracting higher online sales in China, Canada, United Kingdom and Mexico.
Walmart’s chief rival Amazon, too, said earlier this month that India was its most impacted geography due to the lockdowns brought on by the Covid-19 pandemic.
“Limited operations of the company’s Flipkart business in India for a portion of the quarter negatively affected growth,” Walmart said in its earnings presentation to investors for the first quarter ended April 30.
Flipkart’s sales plunged during end-March and in April as the government restricted ecommerce firms from shipping anything apart from food and groceries to consumers. While the firm was able to scale its delivery of essentials, the category still makes up only a tiny portion of its sales.
Doug McMillon, President and CEO of Walmart, reiterated on a conference call with analysts the volatility in business that could extend into Q2. “For instance, the Flipkart business was limited by government regulations to selling only essential items for several weeks,” he said.
India has been an outlier amongst several other countries that have seen sales through online platforms grow massively due to the stay-at-home orders implemented by governments across the world.
For instance, in the US, Amazon reported a 29% increase in sales in the quarter that ended March 31. Walmart too reported that its e-commerce business in the country had grown by a massive 74% in its first quarter, as more people choose to have products delivered home than venture out.
Even outside the US, Amazon said it saw a 19% increase in sales, despite accounting for the dip in Amazon’s India sales in the last week of March when India announced its nationwide lockdown.
India’s strict lockdown has meant that the growth of India’s e-commerce industry could be far lower in 2020. Industry tracker Forrester Research has downgraded its growth estimates for the industry to just 6% for the year, down from around 35% in 2019. The analysts added that there was a big possibility that this figure could be lowered further if sales don’t pick up soon.
The Bentonville, Arkansas-based company said that e-commerce accounted for 9% of its international sales, which grew by 3.4% to $29.76 billion in the first quarter. Growth was driven by categories such as groceries and consumables but was partially offset by a dip in sales of apparel and general merchandise, the company added.
Walmart’s India e-commerce unit, however, drove a 10-basis-point increase in gross profit rate of its international business, it said, without specifying how exactly it had done so.
In its first quarter reporting, Walmart said revenues had grown by 8.6% to $134.6 billion and net income had gone up by 4% to $4 billion. Despite this strong growth, the company said that the pandemic had created a situation of “unprecedented variability”.
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