July 23, 2020 / 6:22 AM / 14 days ago

Flipkart buys parent Walmart's Indian wholesale business

FILE PHOTO: The logo of India's e-commerce firm Flipkart is seen in this illustration picture taken January 29, 2019. REUTERS/Danish Siddiqui/Illustration/File photo

BENGALURU (Reuters) - Flipkart said on Thursday it had acquired parent Walmart Inc’s local cash-and-carry business, as the e-commerce firm strengthens its wholesale offerings to compete better with Amazon.com Inc.

The deal will allow Flipkart to launch a digital marketplace called Flipkart Wholesale next month, the Bengaluru-headquartered firm said, without disclosing any financial details of the deal.

Walmart, which has been running Best Price wholesale cash-and-carry stores in India since 2009, bought a controlling stake in Flipkart in 2018 for $16 billion.

The brand has 28 wholesale stores, two fulfillment centers and more than 1.5 million members, largely comprising mom-and-pop stores, but Walmart has not been able to make money from this business.

The Flipkart deal, which local daily Economic Times had said here was in the offing in January, comes as e-commerce players including Amazon look to woo India's mom-and-pop stores that are considered the backbone of the economy.

Flipkart also faces competition from local online grocery upstart JioMart, backed by billionaire Mukesh Ambani-led Reliance Industries, whose digital arm has raised around $20 billion.

India does not allow foreign investors to control and market their own inventory on their e-commerce platforms, which is seen as giving JioMart and other local players an edge in a key growth market for e-commerce.

Walmart India employees will join the Flipkart Group as part of the deal, Flipkart said.

Reporting by Sachin Ravikumar; Editing by Krishna Chandra Eluri and Rashmi Aich

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