Flipkart acquires Walmart India's wholesale biz to help transform kiranas

Flipkart Wholesale will launch its operations in August 2020 and will pilot services for the grocery and fashion categories
Flipkart has strengthened its wholesale presence with the acquisition of Walmart India, which operates the Best Price cash-and-carry business.

Bengaluru-based Flipkart, in which Walmart Inc holds a majority, has announced the launch of Flipkart Wholesale — a new digital marketplace that looks to transform the kirana retail ecosystem by leveraging technology.

Walmart India, which runs 28 Best Price stores across nine states, has an estimated 3,500 employees. Following the acquisition, Walmart India employees will join the Flipkart group, while the Best Price brand will continue serving its 1.5 million members via its omni-channel network stores and e-commerce operations, the firm said.

“With the launch of Flipkart Wholesale, we will extend our capabilities across technology, logistics, and finance to small businesses,” said Kalyan Krishnamurthy, CEO of Flipkart Group.

“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,” he added.
Walmart had invested $16 billion in 2018 for a majority stake in Flipkart. Earlier this month, it led a $1.2-billion round in Flipkart, valuing the e-commerce firm at $24.9 billion. The plan to integrate Walmart India with Flipkart had been in the works for a few months, according to people in the know.

Flipkart Wholesale, which will be helmed by company veteran Adarsh Menon, will launch in August — with pilot services in the grocery and fashion categories.

Sameer Aggarwal, CEO of Walmart India, will remain to ensure a smooth transition, after which he will shift to another role.

The move will help Flipkart take on Amazon and JioMart. Both companies are rapidly bringing kiranas and local shops onto their platforms.

Satish Meena, senior forecast analyst at Forrester Research, said the acquisition of Walmart India makes a lot of sense as everyone has realised that local kirana stores, which account for 80 per cent of the retail market, cannot be ignored. “Flipkart now suddenly has more than 1.5 million partners, which include small businesses and kiranas,” said Meena. 

Only 7 per cent of the $1.2-trillion retail market is online, and these players are aggressively eyeing the remaining 93 per cent. Experts said the changing business dynamics, on account of the outbreak, triggered this acquisition. Players are gradually moving away from opening physical stores. “Small merchants are now looking forward to technology adoption, compared to the pre-Covid era. After JioMart’s entry, I think it was relevant for Flipkart to act quickly,” added Meena.

Flipkart is looking to offer attractive incentives to small businesses, which will be supplemented with data-driven recommendations for stock selection.

In addition, kiranas and MSMEs will benefit from access to easy credit options and opportunities for new income generation, through various Flipkart initiatives. 

“Today marks the next big step as Walmart India’s pioneering cash-and-carry legacy meets Flipkart’s culture of innovation in the launch of Flipkart Wholesale,” said Judith McKenna, president and CEO of Walmart International.

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