Flipkart Group clocked gross merchandise value (GMV) of around $15 billion last calendar year and is currently on an annualised GMV run rate of $23 billion, multiple people aware of the matter told ET.
GMV, in ecommerce parlance, refers to total value of sales on a platform during a given period. It includes the discounts offered but does not include returns.
This year’s GMV run-rate indicates more than 50% growth year on year for the Walmart-owned ecommerce giant even as the sector remains in a policy flux.
Of the current annualised GMV, around $20 billion is estimated to be from Flipkart while the rest is from its fashion focused platform Myntra, the sources said.
Annualised sales run rate is a projection of upcoming sales based on the sales clocked in a previous month.
“This is (Flipkart Group) much higher than previous years where Flipkart has spoken of around 30% growth and current estimates are higher,” said Arpit Mathur, partner at management consulting firm Kearney. “Covid-led acceleration is there as well, but it would still be a breakout year to clock 40-50% annual GMV growth.”
Separately, a report from wealth management firm Bernstein said Flipkart, excluding Myntra, had clocked GMV of around $12.5 billion in calendar 2020 while Myntra clocked $2 billion. The same report said its rival Amazon India clocked a GMV of around $11.5 billion during the year.
Kearney’s Mathur said the gap between Flipkart and Amazon India would continue to be narrow on a standalone level but the Myntra acquisition would help the former’s GMV base.
Emails sent to Flipkart did not elicit any response on ET’s queries till press time Sunday. Amazon India said it continues to work with small & medium business and brand partners to offer customers widest selection, convenience, and fast delivery.
According to industry sources, over the last few years, Amazon India and Flipkart have seen increased competition, especially in the urban markets, and the gap between them has narrowed at a standalone level. Myntra has helped Flipkart to widen its lead while Amazon’s fashion business remains a work in progress though the local arm of the e-tailer has seen acceptance from consumers for its private labels like Symbol and others.
For Flipkart, its last publicly known GMV numbers were of $7.5 billion in FY18 when Walmart acquired the homegrown e-tailer for $16 billion.
Graphic: Rahul Awasthi
This year, after the second wave of Covid-19 hit their sales in many states, ecommerce platforms saw a gradual recovery in sales to pre-second wave sales unlike last year when sales spiked immediately after the national lockdown.
Flipkart has estimated a growth of around 50-60% this year. This comes at a time when online commerce adoption is increasing, with the pandemic nudging consumers across the country to try online shopping.
The latest GMV numbers throw light on the competitive landscape of Indian ecommerce when the sector
continues to see increased capital flow from marquee global investors while Indian conglomerates like Reliance Industries and Tata Group have entered the space.
At the same time, draft changes proposed by the government for the sector have met with criticism from the platforms and industry associations, as reported by ET.
In July, Flipkart raised $3.6 billion in what was also its first capital infusion from external investors since the Walmart acquisition. Canada Pension Plan Investment Board (CPP Investments), Singapore sovereign wealth fund GIC, Japan’s SoftBank Vision Fund 2 and Walmart led the round, with existing investors like Qatar Investment Authority also participating in the round.
Amazon has invested over $7 billion in India already and continues to invest in its core commerce business as well as others like payments, logistics and others.
Growing eommerce adoption, category mix:
While the US-based retail giants Walmart and Amazon fight it out for dominance in what’s the last remaining large market, the top segments for ecommerce platforms continue to be smartphones, electronics and appliances, and apparel. In terms of online penetration too, these categories have higher penetration than other categories.
According to the Bernstein report, mobile phones, which contribute about 50% of total sales for e-tailers, led the online penetration at 54% last year while fashion had a penetration of 12%. Electronics had a 36% online penetration while home-related products had 15%. Penetration for groceries remains at less than 1%.
In smartphones, ‘exclusive’ launches make about 60% of total online wireless sales, it said. The overall ecommerce penetration out of total retail market would be over 10% by 2025 compared to around 3.6% in 2018.
Graphic: Rahul Awasthi
Another recent report by Bain & Co in partnership with Flipkart pegged overall ecommerce penetration at 4.6% in FY21. Similar to China, South Korea, the US and Australia, India is also seeing an increase in online commerce penetration after the pandemic.
For Flipkart, 49% of its gross sales came from smartphones as per FY21, as per Bernstein estimates, while fashion had 32% share, appliances 16% and groceries 3%.
“Ecommerce take rates, or margins, vary across categories,” the Bernstein report said. “Mobile phone is a low margin category (6-7%). Take rates are high for apparels (15-20%). Low average selling price with high fixed cost structure makes profitability a challenge. Flipkart will need to increase the mix of high margin categories (apparel, private labels), create leadership in new categories like e-grocery and improve margins in mobile phones/wireless categories,” it said.
According to industry reports mentioned above, e-tailing industry would be anywhere between $130-140 billion in the next four years. India currently has at least 140 million online shoppers while the total registered base of users would be much higher.
Owing to the pandemic, demand for grocery and other essentials continue to remain high and Flipkart is steadily scaling up its online grocery play. ET had reported in July at the time of its fundraise that its investment in grocery and the technology stack will be ‘disproportionate’ compared to other segments.
While platforms like Tata-owned BigBasket, Grofers, Dunzo and Swiggy’s Instamart are offering to deliver essentials in less than 30 minutes, Flipkart is scaling up its 90-minute delivery offering Quick. It offers many products but largely is focused on groceries and essentials. Last week, Flipkart said it had taken the service to three new cities – Kolkata, Chennai and Mumbai – and that it will add four more by the end of the current month, taking the total to 14.
It is rolling out the service gradually but is aiming to take it to 200 cities by the end of next year.
“Grocery will be a focus area for everyone,” said Mathur of Kearney. “Amazon hasn’t been big in apparel globally, but their focus on grocery is reflective of the success they have found in other markets. For online retailers, it’s a massive category and leads to better customer retention. There are various models at play-inventory, hyperlocal,” he said.
Flipkart Quick relies on the company’s investment in fresh supplies startup Ninjacart where Walmart too has invested.
The Bain & Co report mentioned above had noted that e-grocery, as a segment, was estimated to see 40% growth before the pandemic but actually grew by 80% in FY21.
PGA Labs – the market intelligence unit of Praxis Global Alliance – estimates that the Indian e-grocery market will reach $22 billion by 2025. As of FY21, BigBasket had a market share of 37%, Amazon had 15%, Grofers 13%, and Flipkart 11%, JioMart’s market share stood at 4% for the same period.
ET reported in May that BigBasket became the second vertical e-tailer after Myntra to have clocked $1 billion of gross sales in FY21 as consumers flocked online to buy groceries.