Walmart that acquired 77% stake in e-commerce major Flipkart last year in a $16-billion deal on Tuesday said the government’s changes in the foreign direct investment (FDI) norms in e-commerce has “had very little impact either on customer experience or on the company’s financials”.
“There was a change in the very early part of this year with Press compliant with Press Note 2, it involved four or five weeks of running around and making changes, some operational processes and some technology, but had very little impact either on customer experience or on the financials,” Richard Mayfield, executive vice-president and chief financial officer at Walmart International said in dbAccess Global Consumer conference call.
“I think you can expect the unexpected going forward, but as I say we’re used to that environment,” Mayfield added.The government in February implemented revised FDI norms in e-commerce, aimed at squeezing the scope for e-tailers to violate the extant policy by influencing prices of products sold on their platforms through predatory discounts.
The revised norms bar e-commerce firms with foreign investments like Flipkart and Amazon from selling products of the entities in which they hold stake or whose inventory they control.
It also disallowed them from asking a seller to sell any product exclusively on their platforms.Mayfield said India presented a big growth opportunity with growing young population and increasing penetration of smartphones.
“We’re building an omni-channel ecosystem to win in India. There’s an e-commerce business within Flipkart, Myntra and Jabong, the brands we have leading market positions in some categories,” Mayfield said. “We have an Ekart, a logistics business. And then we have PhonePe, which is a fintech digital payments business,” Mayfield added.
Last month, Walmart said its gross profit rate for the international segment declined 172 basis points in three months ended April 2019 on a reported basis, primarily due to addition of Flipkart in its earnings.―Financial Express