Flipkart Acquires Walmart India In Wholesale Push Against Reliance, Amazon
Flipkart will launch Flipkart Wholesale, essentially a rebrading of Walmart India’s 28 cash-and-carry stores, in August this year.
Flipkart acquired a 100% stake in Walmart Inc.’s cash-and-carry business as part of the strategy of the online retailer’s majority owner to consolidate its portfolio in the country, strengthen supply chain and ramp up offerings to mom-and-pop stores.
Walmart India—the wholly owned subsidiary of the world’s largest retailer that acquired Flipkart two years ago for $16 billion—operates 28 cash-and-carry stores. These outlets, branded as Best Price Modern Wholesale, will come under Flipkart Wholesale, which will be launched in August, according to a company statement.
This comes at a time the Facebook-Jio deal is threatening to upend the e-commerce market in India. Amazon.com Inc. and Reliance Retail Ltd. already have wholesale businesses, and have been aggressively tying up with small merchants.
Getting a wholesale piece right becomes important for online retailers as it helps them to tap mom-and-pop stores and digitise the small sellers, said Satish Meena, research analyst at Forrester Research. For Flipkart, he said, it gives the company a headstart to ramp up its wholesale business, thanks to Walmart's strength in grocery.
Also, Walmart India has been struggling to expand its wholesale business as the foreign direct investment rules don’t permit the firm to sell to consumers directly. Earlier this year, it had also laid off 56 employees as it chased profitability. The firm had doubled its losses to Rs 172 crore for the financial year ended March 2019 even as its revenue rose 11%.
“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 of Flipkart Group, said in the statement. The acquisition of Walmart India, he said, will add a strong talent pool with deep expertise in the wholesale business, strengthening them and addressing the needs of kiranas and MSMEs.
Also Read: Flipkart Gets $1.2 Billion From Walmart, Others At $25 Billion Valuation
Flipkart Wholesale will begin with pilot services for the grocery and fashion segment, and the new business vertical will be headed by Adarsh Menon, a Flipkart veteran. Walmart India CEO Sameer Aggarwal will hold the position during a transition period, and then move to another role within Walmart, the statement said.