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Flipkart acquires Walmart’s wholesale business in India

Walmart pumped in USD 1.2 billion in Flipkart, at a valuation of USD 24.9 billion this month.

Image Credit To Flipkart.

Indian e-commerce giant Flipkart, owned by the world’s largest retailer Walmart, Thursday said it has acquired 100% stake in its American parent’s local wholesale arm Walmart India. It also announced the launch of a new digital marketplace called Flipkart Wholesale to service neighborhood stores as well as small businesses.

Flipkart Wholesale will launch its operations in August 2020 and will pilot services in categories such as grocery and fashion, it said in a statement. It will leverage Flipkart Group’s supply chain infrastructure to reach kiranas and MSMEs across the country.

Kirana stores are neighborhood shops that sell household items, groceries, dairy products, vegetables, fruits, and other everyday goods.

The new entity will be headed by Adarsh Menon, a Flipkart veteran. Meanwhile, the Best Price brand will continue to serve its 1.5 million-plus members through its omnichannel network.

“We will leverage the synergies between Flipkart and Walmart India as we stay focused on transforming the wholesale experience for kiranas and MSMEs,” said Menon, who is now senior vice president and head at Flipkart Wholesale.

According to him, thousands of kiranas have already partnered with Flipkart along with top Indian brands, local manufacturers, and sellers.

It was first reported in January that Flipkart was looking to acquire Walmart’s cash and carry wholesale business. The move seems to be in works for a while now, considering the fact that earlier this month, Walmart pumped in USD 1.2 billion in Flipkart, at a valuation of USD 24.9 billion. The investment came two years after it acquired a 77% stake in the latter for USD 16 billion.

Walmart India has 28 wholesale stores under the Best Price brand, which sells an assortment of over 5,000 items to kirana stores, and small business owners.

With Walmart’s cash and carry business under its belt, Flipkart would solidify its relationship with kiranas that are increasingly becoming key conduits to tap into India’s vast consumer base that lives beyond the country’s metropolitan cities.

“With the launch of Flipkart Wholesale, we will now extend our capabilities across technology, logistics, and finance to small businesses across the country,” Kalyan Krishnamurthy, chief executive officer at Flipkart Group, said in a statement.

“The acquisition of Walmart India adds a strong talent pool with deep expertise in the wholesale business that will strengthen our position to address the needs of kiranas and MSMEs uniquely,” Krishnamurthy added.

Indeed, the move will strengthen the company’s positioning in soon-to-be USD 10.5-billion e-grocery space, which is currently dominated by Bigbasket, Grofers, and Amazon.

The US-based e-commerce behemoth also runs an online B2B market place for sellers in the country. Additionally, it owns a wholesale arm, Amazon Wholesale, which directly sources products from brands and supply them to third-party vendors.

Moreover, B2B online marketplaces such as Unicommerce, Moglix, and Udaan that raised USD 585 million at a valuation of USD 2.8 billion last year, have grown over the last few years and would give tough fight to Flipkart and Amazon in their bid to tap millions of SMEs which are increasingly coming online.