Online retailer Flipkart has taken over the local cash-and-carry business of parent Walmart Inc., as it looks to better compete with main rival Amazon.com Inc. and emerging challenger Reliance Industries Ltd’s JioMart.
The move will allow the e-commerce firm to start a digital marketplace called Flipkart Wholesale to focus on mom-and-pop retail stores, the company said in a statement. It didn’t disclose any financial details of the deal.
The deal comes barely days after Bengaluru-based Flipkart secured $1.2 billion in fresh capital from Walmart and other investors.
The transaction will consolidate US-based retail behemoth Walmart’s entire India business under Flipkart Group.
Walmart operates 28 warehouse-club-style stores in India that are only open to members. Branded as Best Price Modern Wholesale, the stores serve independent retailers and other small businesses.
Best Price has more than 1.5 million members, including neighbourhood kirana stores, hotels, restaurants, cafes and other small and medium-sized enterprises.
"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, CEO at Flipkart Group.
The combined entity will launch its operations next month and will pilot services for the grocery and fashion categories.
Flipkart Wholesale will be headed by Adarsh Menon, a Flipkart veteran. Walmart India CEO Sameer Aggarwal will move to another role in Walmart after ensuring a smooth transition.
“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 mission to help Indian businesses grow and succeed, " said Judith McKenna, CEO at Walmart International.
Walmart acquired a 77% stake in Flipkart for $16 billion in May 2018. The acquisition valued Flipkart at $20.8 billion. The fresh capital infusion in Flipkart earlier this month comes at an estimated valuation of $24.9 billion.
The funding comes at a time when Flipkart and Amazon are facing an imminent threat from JioMart, the online arm of Reliance Retail Ltd.
Reliance Retail is a unit of Reliance Industries, led by billionaire Mukesh Ambani. RIL has raised around $20 billion over the past four months from a dozen investors including Facebook Inc, Google and a bunch of private equity firms for its digital unit Jio Platforms Ltd. The conglomerate plans to combine everything from telecom and broadband services to online grocery delivery and movie streaming under Jio Platforms.