E-commerce giant Flipkart has announced that it will be acquiring Walmart India’s loss-making B2B wholesale store Best Price, to launch its own service ‘Flipkart Wholesale’ in a bid to expand its presence in the food and retail segment.
This will mark as Flipkart’s entry into the wholesale market for small retailers while competing with rival firms like Amazon and Reliance JioMart.
Flipkart Wholesale will pilot its services across grocery and fashion categories and will be launching its operations in August 2020. The unit will be headed by Adarsh Menon and Walmart India CEO Sameer Aggarwal to ensure a smooth transition for the company.
Once the transaction and the deal are complete, Agarwal will be moving to another role within Walmart.
Kalyan Krishnamurthy, CEO at 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..will strengthen our position to address the needs of kiranas and MSMEs uniquely.”
Reverse acquisition for Flipkart
Walmart acquired the Bengaluru-based ecommerce giant for $16 billion in 2018. The reverse acquisition will help Flipkart Wholesale strengthen its capabilities and B2B service offering. Walmart India employees will be joining Flipkart Group, and the home office team will integrate over the next year.
Sameer Aggarwal, Walmart India CEO, said that combining the two would allow them to grow much faster and become bigger. Currently, Walmart India functions as a separate identity within the Flipkart Group.
Multiple small businesses have adopted technology for expansion during the COVID-19 pandemic, opening up a new market for ecommerce players. Redseer Consulting (1) reported that three out of four mom-&-pop stores have no exposure to technology platforms for any service, including payments or procurement.
Walmart Inc led a $1.2 billion investment in Flipkart Group, earlier this month, bringing up the company valuation at $24.9 billion, 19% higher than when a majority stake was sold to the US retail giant.