Thursday, July 23, 2020

Flipkart acquires Walmart India’s wholesale business

It's all happening in India's e-commerce market.

With the emergence of JioMart, and the ever lurking presence of Amazon India, the third big player in the fray Flipkart had to do something to fend off the competition

And today, the Walmart-owned Flipkart unveiled its plans in the wholesale market. With kirana stores and MSMEs being vital cogs in the whole industry, Flipkart today announced the unveiling of its exclusive B2B marketplace – Flipkart Wholesale.

This, the company said, will enable the kirana shops and MSMEs to procure goods in categories including grocery, general merchandise, or fashion along . Flipkart is also offering them special schemes, easy credit options and incentives. 

Along with the launch, Flipkart also acquired the wholesale business of its parent company Walmart in India.

This reverse acquisition of the business-to-business segment of Walmart in India will help Flipkart to expand its footprint in the food and grocery segment and strengthen its supply chain.

Wholesale focus

Flipkart said it has acquired “100 per cent interest in WalMart India Private Limited, which operates the Best Price cash-and-carry business”. This would allow Flipkart to benefit from Walmart’s wholesale capabilities.

Walmart currently owns and operates 28 Best Price cash and carry wholesale stores that offer close to 5,000 items. Walmart also has two fulfillment centres based in Lucknow and Hyderabad.

"Flipkart Wholesale will draw on the merchandising experience of the Walmart India team, its strong relationships with brands, deep DNA of servicing kiranas and 12+ years of operating Best Price stores," Flipkart said in a press release.

Kalyan Krishnamurthy, Chief Executive Officer, Flipkart Group, said, “With the launch of Flipkart Wholesale, we will now extend our capabilities across technology, logistics and finance to small businesses across the country. 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."

Judith McKenna, President and Chief Executive Officer, Walmart International, said, “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. By leveraging each other’s strengths and unique expertise, this combined team will break new ground in their shared mission to help Indian businesses grow and succeed.

Primed for fight

Flipkart Wholesale will launch its operations in August 2020 and will pilot services for the grocery and fashion categories. It will be headed by Adarsh Menon, a veteran at Flipkart. Sameer Aggarwal, Chief Executive Officer at Walmart India, will remain with the company to ensure a smooth transition, after which time he will move to another role within Walmart.

Adarsh Menon, Senior Vice President and Head - Flipkart Wholesale, said, “Flipkart Wholesale will further deepen and build on Walmart India and the Flipkart Group’s commitment to kiranas and MSMEs over the last several years." 

Sameer Aggarwal, Chief Executive Officer, Walmart India, said, “This move recognises the critical role that kiranas and MSMEs play towards India’s economic prosperity and growth, and the coming together of Walmart India with Flipkart Wholesale will provide an opportunity to buildupon the 12+ year legacy of the Best Price brand serving kiranas across India.”

With this aggressive move, Flipkart, it seems, is priming itself to take on the challenges posed by JioMart and Amazon.

Flipkart is also fortified financially. Walmart, which acquired a majority stake (77%) in Flipkart for $16 billion two years ago, has again led a new 1.2 billion financing round. Flipkart’s valuation has risen almost 20% since Walmart's original investment.

Source: Flipkart.

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