Flipkart on Thursday announced the acquisition of Walmart India for an undisclosed amount, and said it will launch ‘Flipkart Wholesale’ next month, as the homegrown e-commerce major looks to tap into the $650 billion B2B retail market in India.
Walmart India runs 28 Best Price wholesale stores in the country.
The announcement comes a week after Flipkart had said it had raised $1.2 billion in funding from a Walmart-led investor group. In 2018, Walmart Inc had invested $16 billion for acquiring 77 per cent stake in the group.
Flipkart Wholesale is a new digital marketplace focusing on addressing the business-to-business (B2B) segment in India.
“This marketplace is going to effectively link sellers and manufacturers on one end and kiranas and micro, small and medium enterprises (MSMEs) on the other end,” Flipkart Senior Vice President and Head – Flipkart Wholesale Adarsh Menon told PTI.
The acquisition will help strengthen the capabilities to address the requirements of kirana and MSMEs, he said.
The move will further intensify competition with Flipkart’s rival Amazon that has a similar offering for the B2B segment.
“The B2B market for finished goods is estimated to be worth USD 650 billion. To start with, we will be focusing on USD 140 billion of that $650 billion, which is largely the categories of fashion, grocery, general merchandise, large and small electronics,” Menon said.
Walmart, the world’s biggest retailer, had entered India through a partnership with Bharti Enterprises for a cash-and-carry business that allows small businesses, kirana stores and hotels to buy in bulk.
In 2013, the two companies went separate ways and Walmart continued to scale the cash-and-carry business in India on its own.
Flipkart Wholesale will launch its operations in August, and will be headed by Menon.
Sameer Aggarwal, Chief Executive Officer at Walmart India, will remain with the company to ensure a smooth transition, after which he will move to another role within Walmart.
Employees of Walmart India business will join the Flipkart Group and the home office teams will integrate over the next year, the companies said in a statement.
Walmart India was a wholly-owned subsidiary of Walmart Inc, and is estimated to have about 3,500 employees.
The Best Price cash-and-carry business will continue to serve its over 1.5 million members via its omnichannel network of 28 stores in nine states and e-commerce operations. Walmart India has a new cash-and-carry store coming up in Tirupati in the next few months.
“A thing we saw through Covid-19 (outbreak) was kiranas are shopping in more omnichannel ways than before. In our Best Price business, we had a 4X increase in e-commerce within our business, which is primarily brick and mortar. What that tells us is that kiranas are very open to shopping both online and offline,” Walmart India CEO Sameer Aggarwal said.
He added that kiranas will remain big, and organised B2B will account for a bigger part of retail.
“…Within that, online will get a disproportionate share of growth. The capabilities are complimentary. This move recognises the critical role that kiranas and MSMEs play towards India’s economic prosperity and growth,” he said.
These businesses will have one-stop access to an extensive selection of products with attractive schemes and incentives, supplemented with data-driven recommendations for stock selection, delivered through a fast and reliable network to drive greater efficiencies and better margins, Menon said.
Kiranas and MSMEs will also benefit from access to easy credit options and opportunities for new income generation through various Flipkart initiatives, creating new ways to catalyse growth, he added.
At the same time, partners will benefit from broader reach across the country, micro-market insights to enable effective inventory planning and new product development, and cost-effective distribution.
Meanwhile, Walmart Inc continues to operate a separate technology unit in the country under Walmart Labs India.