Can Flipkart Make It Big In B2B Segment By Acquiring Loss Making Walmart India?

Ecommerce giant Flipkart Group has acquired Walmart’s loss-making B2B wholesale store, Best Price Modern Wholesale, to launch its own service ‘Flipkart Wholesale’ in a bid to expand its presence in the food and retail segment.

Flipkart Wholesale will launch operations in August 2020 and will pilot services for the grocery and fashion categories. It will be headed by Flipkart veteran Adarsh Menon and Walmart India CEO Sameer Aggarwal will remain with the company to ensure a smooth transition. Once the transactions and deal is complete, Agarwal will move to another role within Walmart.

This reverse acquisition will help Flipkart Wholesale strengthen its capabilities and B2B service offering. Walmart India employees will join Flipkart Group and the home office team will integrate over the next year. The company has assured that the Best Price brand will continue to serve its 1.5 Mn customers through its omnichannel network of 28 stores and ecommerce ventures.

Walmart India CEO Aggarwal said, “This move recognises the critical role that kiranas and MSMEs play towards India’s economic prosperity and growth, and the coming together of Walmart India with Flipkart Wholesale will provide an opportunity to build upon the 12+ year legacy of the Best Price brand serving kiranas across India.”

Notably, Walmart doesn’t sell directly to consumers in India, but through organised wholesaler or cash-and-carry operators that sell merchandise to local kirana stores, hotels and catering firms. Besides Best Price Modern Wholesale, it also runs a membership-based programme that counts more than one million members as of October 2019.

In the financial year 2019, Walmart India wholesale unit that runs Best Price brand had doubled its year-on-year net loss at INR 172 Cr. Simultaneously, it had also noted an 11% spike in its revenue at INR 4,065 Cr. Though Walmart had specified that the losses mounted as it was investing heavily in its technology infrastructure to enhance its omnichannel capabilities and “people development”.

But with Walmart’s already established network, it will be easier for Flipkart to expand its services and onboard more customers. The homegrown ecommerce giant has emphasised that it will leverage on its technology capabilities, position in the ecommerce segment and understanding of the Indian industry to boost the services.

Flipkart Wholesale will continue to develop technology tools, and ecosystem partnerships, the company has assured. It also has its vast supply chain infrastructure to reach kiranas and MSMEs. Which will help it boost this venture.

Kalyan Krishnamurthy, CEO of 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 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.”