Thursday, July 23, 2020

Flipkart buys Walmart’s India wholesale business to reach mom and pop stores

Flipkart said on Thursday it is launching a wholesale marketplace to serve small and medium-sized businesses and neighborhood stores in India, entering an increasingly crowded space that has attracted several players including India’s richest man, Lightspeed-backed Udaan, Amazon, and Facebook in recent years.

To launch the wholesale marketplace, called Flipkart Wholesale, the e-commerce giant said it was acquiring a 100% stake in Walmart’s India business, which had limited standalone presence in the country and operated Best Price cash-and-carry business that runs 28 stores across the country and has amassed more than 1.5 million members.

Flipkart, which has sold more than 80% of the business to U.S. retail giant Walmart, did not disclose the financial terms of the acquisition. Earlier this month, Walmart led a $1.2 billion financing round in Flipkart to increase its majority stake in the Indian firm.

Flipkart Wholesale, which will become operational next month, will use the e-commerce giant’s existing vast supply chain infrastructure and offer an “exhaustive” range of products and merchandise, as well as easy credit options and opportunities for additional income generation to neighborhood stores (locally known as kiranas) and other small businesses, the company said, adding it will also help these businesses with insights so that they can plan their inventory needs more effectively.

Kalyan Krishnamurthy, chief executive of Flipkart Group, said 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. With this development, the Flipkart Group will further build upon the synergies across its businesses to drive greater value and choice for end-consumers and businesses alike.”

Flipkart said it has already signed up top Indian brands, local manufacturers, and sellers across the country. The wholesale business — to be overseen by Adarsh Menon, a veteran at Flipkart, and Sameer Aggarwal, chief executive at Walmart India — will pilot services for the grocery and fashion categories next month. Aggarwal will leave his current position after the transition and will serve in a new role within Walmart.

“For over a decade, we’ve been committed to India’s prosperity by serving kiranas and MSMEs, supporting smallholder farmers and building global sourcing and technology hubs throughout the country. 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 chief executive of Walmart International, in a statement.

A handful of startups have attempted to build business-to-business marketplaces in India over the years. Lightspeed-backed Udaan has emerged as the largest player in this space, with its logistics network reaching 600 cities in India (and an additional 300 with third-party logistics providers). It was joined by a new contender this year.

India’s richest man Mukesh Ambani’s JioMart, a new e-commerce venture between the nation’s largest retail chain (Reliance Retail) and telecom network (Reliance Jio Platforms), began limited operations this April and has since expanded to over 200 cities and towns across India.

Facebook, which invested $5.7 billion in Reliance Jio Platforms earlier this year, said the two companies will explore ways to serve the nation’s 60 million small and medium sized businesses.

“These small businesses are critical to the Indian economy. If you look at Facebook as a company, there has always been a focus on helping these businesses,” Facebook India head Ajit Mohan told TechCrunch in an interview earlier this year. “These small businesses, first-time entrepreneurs and new ventures leverage the Facebook platform to find new customers and expand to additional markets.”

On Wednesday, WhatsApp said it plans to help digitize small businesses in India.

Neighborhood stores dot tens of thousands of cities, towns and villages in India. They have survived — and thrived, despite — retail giants’ billions of investment in the country. In recent quarters, both Flipkart and Amazon have rushed to collaborate with these mom and pop.



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