Flipkart has acquired 100% stake in Walmart India Pvt Ltd, which operates cash and carry stores in wholesale format across India. Notably, Walmart India Pvt Ltd is owned by Flipkart’s parent company and this specific transaction comes under the category of’ reverse acquisition’ or reverse ‘buyout.’
Apparently, Tata Group was reportedly in talks to pick a significant stake in Walmart India’s loss making wholesale business. The negotiation between the two companies though collapsed, which eventually paved way for the reverse acquisition between Flipkart Group and its parent company owned Indian entity. Just to put things in perspective here, Walmart India Private Limited is a wholly owned subsidiary of Walmart Inc, which owns 77% stake in Flipkart.
Flipkart will operate this wholesale business under the brand name Flipkart Wholesale.
Walmart India operates 28 Cash & Carry wholesale stores across different parts of India and also operates two fulfillment centers in Hyderabad and Lucknow. The U.S based retail giant entered India’s wholesale business in 2007 after striking 50:50 partnership with Bharati Enterprise. However, this partnership was called off in 2013.
Interestingly, this reverse acquisition has taken place almost a week after Walmart Inc pumped $1.2 Bn in Flipkart.
This reverse buyout, by the way, will help Flipkart to deepen its footprint in B2B wholesale business wherein it will supply goods directly to small kirana stores and MSME across the country. Flipkart will look to leverage and take advantage from Walmart’s existing 1.5 Mn members.
India’s home grown e-commerce giant will equally aim to create a synergy between its B2B wholesale business and two companies in which it owns strategic stake, Ninjacart and Shadowfax. While Ninjacart is a B2B ecommerce platform that directly connects farmers of vegetables and fruits with kirana stores, Shadofax is a logistic company that specializes in last mile delivery.
A seamless synergy between these businesses will not only help the Bengaluru based company in gaining a stronghold in the wholesale space but also broaden its presence in the grocery business.
It is pretty clear now that wholesale e-commerce and kirana stores has emerged as the new frontier, with Flipkart, Amazon and Reliance’s owned Jiomart fighting it out in the battleground. Unicorn startup Udaan is also one of the tough competitors that is trying to dominate the B2B e-commerce space.