Flipkart, an Indian e-Commerce company, has recently announced the acquisition of the local cash-and-carry business of Walmart. The business acquisition has been signed by the company to strengthen its wholesale offerings and efficiently compete with its counterparts such as Amazon.com, Inc.
The takeover will reportedly lead to the launch of a digital marketplace named as ‘Flipkart Wholesale’ by the e-Commerce firm in August 2020. Financial details of the recent transaction have not been disclosed.
Since 2009, the American retail corporation, Walmart, has been operating its Best Price wholesale cash-and-carry stores. The company had obtained a controlling stake for $16 billion in Flipkart in 2018. The brand has also been extensively serving customers through its 28 wholesale stores and 2 fulfillment centers, with over 1.5 million members. Its wholesale business largely comprises of mom-and-pop stores. However, the retail chain has not been making profits from its business due to the prevailing economic crisis.
Sources familiar with the matter have stated that the latest acquisition deal happened in line with several e-Commerce players, such as Amazon, eyeing the acquisition of mom-and-pop stores in India. These stores are considered as the basis for driving economic growth in the region.
Additionally, the online store faces high competition from JioMart, which is backed by Reliance Industries led by billionaire Mukesh Ambani, as well as other online grocery chains in India.
Reliance had previously raised nearly $20 million through its digital arm. As per new FDI (foreign direct investment) rules for e-Commerce in India, the country does not allow foreign investors to gain control as well as market their own inventory on the e-Commerce platforms. This significantly provides JioMart & other local players an edge to expand in the key e-Commerce market.
As per the terms of the agreement, Walmart’s employees in India will join Flipkart.