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Walmart invested big in Flipkart, which has enhanced “Big Billions Days” to make 2019 the biggest ever
This may be just another week for shopping in the U.S., but in India, it’s “Big Billions Days.”
Flipkart’s multiday retail event is taking place from Sept. 29 through Oct. 4, and according to early numbers from the company, it’s off to a tremendous start, with day one sales doubling versus last year.
“Big Billions Days” coincide with the Hindu fall festival Navaratri and, according to Sumanta Dey, Flipkart’s communications lead, it’s a big shopping period for India as workers receive their bonuses.
“This is the time to buy new clothes and things for the house,” he told MarketWatch. “There’s a tradition of shopping around this time.”
Like Amazon.com Inc.’s AMZN, +0.61% “Prime Day” and Alibaba Group Holding Ltd.’s BABA, +0.69% “Singles Day,” “Big Billions Days” promise huge discounts on everything from clothes to appliances to mobile devices. It first launched in 2014 and ran from Oct. 10 through Oct. 14 last year. Experts say this will be the biggest “Big Billions Days” ever.
In May 2018, Walmart Inc. WMT, +0.22% announced it would take a $16 billion, 77% stake in Flipkart, which calls itself the “leading” e-commerce marketplace in India. The company says that millions of people are already shopping and otherwise engaging with the site, though neither Walmart or Flipkart provided sales totals for the first day.
In 2018, Walmart said Flipkart sales for the entire event were up 80% from the previous year.
In preparation for this year’s event and beyond, Flipkart has launched a Hindi site, delivery speed has improved, financing programs and other measures have been taken to reach customers who manage their money outside of traditional banks, and affordability across different categories, like refurbished goods, has been revamped.
“By all indications this is going to be the biggest festive season that India has witnessed,” said Flipkart’s Chief Executive Kalyan Krishnamurthy in a statement. “There is no doubt that e-commerce has not only lifted consumer sentiment but has also driven the industry to set new benchmarks. Affordability and value driven themes clearly are the pulsating chords for India and Bharat.”
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Flipkart expects 60% of India’s population, or 840 million people, to be using the internet by 2022. Data provided by Amplify ETFs says 654 million shoppers are estimated to shop online in India this year.
Deborah Weinswig, founder of Coresight Research, a global research firm specializing in retail and technology, the shopping event is one way in which Flipkart, and Walmart, aim to snap up more of that online shopping market share.
“Flipkart has been working to extend its reach more, for example by partnering with kiranas (small mom-and-pop stores that dominate Indian retail) to extend delivery capabilities to newer postal codes,” Weinswig said. Flipkart says it has expanded operations in hundreds of new towns and cities ahead of this year’s event.
“Walmart and Amazon are fighting to become the dominant player in India’s online marketplace, working hard to outdo one another via shopping festivals such as ‘Big Billions Days,’ but these events are only skirmishes in a larger battle for both market share and mindshare among Indian consumers,” she said.
Amazon has its own shopping event happening in India from Sept. 29 through Oct. 4 called Great Indian Festival. The company said Amazon’s India site had the single largest day for new Prime memberships on the first day.
That larger battle might not be determined for many years, says, Jonathan Treiber, CEO of RevTrax, a platform that manages special offers and discounts.
“The question everyone is asking is timing,” he said. “It’s very hard to time socioeconomic patterns and when the rise of the middle class is going to swell sufficiently to support the prior valuation.”
To move things along, Treiber says Walmart could sink even more money into growing business in India, but he thinks the company is too “risk averse” to do so.
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“They would be uncomfortable with the amount of money they would have to lose to gain in India, unlike Amazon, which lost a lot to gain in the U.S.,” he said. “Walmart’s more temperate approach means Flipkart takes most of the risk.”
Christian Magoon, CEO of Amplify ETFs, also notes the high price Walmart paid to build its stake in Flipkart, but sees the benefit in more than just the retail arm of the business.
“A silver lining to that cash burn however is the PhonePe unit at Flipkart which is one of India’s leading digital payment companies,” he said. “PhonePe is going to spin out of Flipkart shortly and estimates are that it may be worth $10 billion to $15 billion as a standalone business. This company also lends strategic value to Flipkart’s pursuit of the Indian e-commerce crown since mobile payments are a fast growing category in emerging markets like India.”
Walmart stock has rallied 27.6% for the year to date. The Amplify Online Retail ETF IBUY, +0.09% is up 16.7%. Amazon stock has gained 15.4%. And the Dow Jones Industrial Average DJIA, +0.36% is up 15.6% for 2019 so far.