Walmart Inc. is taking a new tack in the notoriously closed consumer market of India, a key front in the mass merchant’s battle for global domination with Amazon.
Crucial to the new strategy is getting closer to the country’s mom-and-pop “kirana” grocery stores and other small merchants.
To accomplish that, Flipkart — the Indian e-commerce company Walmart spent $16 billion to buy control of in 2018 — plans to launch a wholesale business to help small retailers buy goods directly from producers.
Walmart described the wholesale business, which will launch next month with a pilot for grocery and fashion goods, as “a new digital marketplace that will help transform India’s retail ecosystem by leveraging cutting-edge and locally developed extensive leadership in the consumer e-commerce segment and technology.”
The effort will meld two parts of Walmart’s business, with Flipkart buying 100 percent of Walmart India Private Ltd., which operates 28 Best Price club stores and can bring some operation muscle and experience to the wholesale business.
Kalyan Krishnamurthy, chief executive officer of Flipkart, touted the new business as an important evolution.
“As the e-commerce pioneer in India, the Flipkart Group has transformed the shopping experience for millions of Indian consumers,” Krishnamurthy 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 [micro-, small- and medium-sized enterprises’] uniquely.”
Walmart and Amazon, which was outbid for Flipkart and is expanding on its own in India, are tackling a market that is both gigantic with 1.3 billion people, but has also complicated by regulations, evolving restrictions on foreign ownership and an entrenched culture of small retail players.
But Walmart clearly sees more opportunity at Flipkart. The e-commerce company, which also counts Google as an investor, recently raised $1.2 billion in an equity in a round that was led by Walmart and valued the business at $24.9 billion, ahead of its $20.8 billion valuation from two years ago.
And Flipkart is looking to turn the 12 million kirana stores and other small businesses across India, into an even greater opportunity.
“Whether in grocery, general merchandise or fashion, these businesses will have one-stop access to an extensive selection of products with attractive schemes and incentives, supplemented with data-driven recommendations for stock selection, delivered through a fast and reliable network to drive greater efficiencies and better margins,” Walmart said.
Adarsh Menon, a veteran of the e-commerce company who is running the new wholesale business, added: “Thousands of kiranas have already partnered with Flipkart to enhance their business and income streams. We will leverage the synergies between Flipkart and Walmart India as we stay focused on transforming the wholesale experience for kiranas and MSMEs.”
The marketplace approach mirrors — to some degree — what Alibaba has done in China, where the e-commerce giant not only connects buyers and sellers, but also provides a variety of services that keeps it in the mix.