Flipkart announced on July 23, 2020 that it has acquired parent company, Walmart Inc’s Best Price wholesale cash-and-carry business in India.
The move will allow Flipkart to launch a digital marketplace called Flipkart Wholesale next month. This will also strengthen the e-commerce firm’s wholesale offerings, to compete better with Amazon.
Walmart has been running the Best Price wholesale cash-and-carry stores in India since 2009. The American retail giant had bought a controlling stake worth USD 16 billion in Flipkart in 2018.
Key Highlights
• The Flipkart deal with parent Walmart was in cards since January 2020. It comes at a time when e-commerce companies including Amazon are looking to woo India's mom-and-pop stores or Kirana stores that are considered the backbone of the economy.
• Flipkart also faces intense competition from RIL’s JioMart, which was launched in December 2019. JioMart is an omnichannel tech-platform that works to unite customers, with Kirana stores and local traders and producers.
• RIL Chairman Mukesh Ambani had announced recently that they plan to extend the service to people across India gradually and help connect over 3 crore offline retailers with over 20 crore households in India.
• Walmart has overall 28 wholesale stores, two fulfillment centers and more than 1.5 million members, largely comprising mom-and-pop stores (Kirana stores) in India. However, Walmart has not been able to make money from this business.
• Under the deal, the Walmart India employees will join the Flipkart Group. No layoffs will happen.
Background
India’s new e-commerce rules do not allow foreign investors to control and market their inventory on their e-commerce platforms. This has given a relevant edge to local players such as JioMart in a key growth market for e-commerce.
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