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Flipkart Buys Parent Walmart’s India Business to Launch Wholesale Service

Flipkart on Thursday announced Flipkart Wholesale as a digital marketplace to serve local kirana stores and micro, small, and medium enterprises (MSMEs) in India. The e-commerce company is acquiring 100 percent stake in Walmart India, a subsidiary of US retail giant Walmart that operates the Best Prime cash-and-carry business in the country, to enable the new experience and take on Amazon and Reliance Industries’ JioMart. The new marketplace will help transform the kirana retail ecosystem in the country by leveraging locally developed technology, the company said in a statement.

The Flipkart Wholesale marketplace will begin its operations in August, initially piloting services for the grocery and fashion categories. It will be headed by Flipkart Senior Vice President Adarsh Menon, though Walmart India Chief Executive Officer Sameer Aggarwal will remain with the company to ensure a smooth transition, after which he will move to another role within Walmart.

Flipkart noted in its statement that Walmart India’s Best Price brand will continue to serve its over 1.5 million members through the omnichannel network of 28 stores and e-commerce operations. However, the employees working with the Walmart India business will join the Flipkart Group.

To begin with the new experience, Flipkart said that local manufacturers and sellers have partnered with the Flipkart Wholesale business. The partners are claimed to receive broader reach across the country, along with micro-market insights and cost-effective distribution. The name of initial partners are yet to be revealed, though.

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

Neighbourhood stores (aka kiranas) and MSMEs will get an “extensive selection” of products from Flipkart Wholesale along with credit options and incentives. The Bengaluru-based company also said that it would offer opportunities to its wholesale customers to grow their businesses and achieve scale as well as profitability.

The new business by Flipkart will leverage its native supply chain infrastructure and technology capabilities, while the Walmart India team would help offer its merchandise experience. Moreover, Flipkart Wholesale would also develop its in-house technology tools and ecosystem partnerships to emerge as a strong competitor against other wholesale businesses in the country.

“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,” said Judith McKenna, President and Chief Executive Officer, Walmart International.

The new development comes just days after Flipkart raised an additional $1.2 billion (roughly Rs. 8,973 crores) in a fresh funding round led by Walmart. Back in May 2018, the Arkansas-based retailer acquired 77 percent controlling stake in Flipkart at $16 billion.

An answer to JioMart?
Flipkart Wholesale is expected to compete against JioMart, the e-commerce venture launched by Reliance Industries subsidiary Reliance Retail in January, that received an expansion to 200 towns across the country in May. It is also expanding to electronics, fashion, healthcare, and pharmaceuticals, as announced by Reliance Industries Chairman Mukesh Ambani earlier this month.

Aside from JioMart, there are startups including Udaan as the key players serving kirana stores in the country. Flipkart arch-rival Amazon also showed interest in serving kiranas and Indian small businesses in the recent past.