Indian e-commerce player Flipkart Group has acquired a 100% stake in its parent company Walmart’s Indian unit, which operates the cash-and-carry Best Price business, and has launched a new digital marketplace, Flipkart Wholesale.
The deal, which is a part of Flipkart’s initiative to expand it’s business-to-business vertical will also help them take on increasing competition in the segment from the likes of JioMart, Udaan, Metro Cash & Carry and Amazon.
Financial details of the deal have not been revealed. The company clarified that Flipkart Wholesale will begin functioning from August 2020 with the grocery and fashion segment.
Walmart, which runs Best Price wholesale cash-and-carry stores in India since 2009, acquired a majority stake in Flipkart for $16 billion in 2018.
Though Walmart has 28 wholesale outlets, two fulfillment centers and more than 1.5 million members, including mostly mom-and-pop shops (a colloquial term used to describe a small, family-owned or independent business), it hasn’t been successful in making money off this market.
Reports suggest that this deal has been under discussion since January this year as Amazon has been looking to woo the mom-and-pop stores of the country which are considered the backbone of India’s economy.
“With the launch of Flipkart Wholesale, we will now extend our capabilities across technology, logistics and finance to small businesses across the country,” Flipkart Group Chief Executive Officer Kalyan Krishnamurthy said.
Through its various initiatives, Flipkart aims to ensure access to credit options and opportunities for new revenue generation and significant value to the local stores.
Flipkart faces tough competition from local online grocery upstart, JioMart, backed by Mukesh Ambani’s billionaire Reliance Industries, whose digital arm has raised around $20 billion. It has been ramping up its manufacturer engagements and supply chain capabilities in the run-up to the launch of Flipkart Wholesale since the beginning of this year.
Flipkart informed that as part of the deal Walmart India employees will join the Flipkart Group.
India does not allow foreign investors to control and sell their own inventory on its e-commerce platforms, which is seen as giving JioMart and other local players an advantage in the crucial e-commerce sector.
Walmart Inc. led a $1.2 billion investment in Flipkart Group earlier this month, valuing the firm at $24.9 billion, around 19% higher than when it sold a majority stake to the US retail giant. That was Flipkart ‘s biggest such fundraising since it was acquired by Walmart two years ago
