Flipkart's acquisition of Walmart India Private Limited and the announcement of its plan to launch Flipkart Wholesale, a new marketplace, are expected to add to the wholesale capabilities of the group in India.
The acquisition is aimed at leveraging Walmart’s talent, technology backbone, merchandising expertise, wholesale capabilities and logistics infrastructure. It is also expected boost the supply chain capabilities of Flipkart in the B2B segment. At the same time, kiranas and MSMEs may also benefit as they will have one-stop access to an extensive selection of products with different schemes and incentives that would be supplemented by data driven recommendations for stock selection.
“This move will open up a vista of opportunities in powering largely unorganised kirana shops across India, forming a new business vertical for Flipkart of wholesale trade which has immense market potential,” said Subramanyam Sreenivasaiah, CEO of Ascent HR. It may also help strengthen the ecosystem of Flipkart in fulfilling the customer needs holistically, and the sector may see more action coming up in the near future with Flipkart Wholesale taking JioMart head-on.
“Small retailers, large households, caterers, offices, restaurants etc. can be serviced by Flipkart. They might be able to introduce new categories of products from the global range of Walmart to Indian markets,” observed Aditya Narayan Mishra, director and CEO of CIEL HR Services.
Flipkart acquiring Walmart heralds the next move of consolidation. “The erstwhile industry consolidation was led by the premise of seeking a candidate who brought size or a differentiated offering. The fact that Reliance Retail is building up similar capabilities shows that Flipkart is preempting Reliance’s move and making itself battle ready. Furthermore, the joint entity may not face the same draconian regulatory framework that was exclusively designed for online e-commerce firms. So, there is a chance that this may have also compelled Flipkart's move,” pointed out Alok Shende of Ascentius Consulting.
Flipkart Wholesale will launch its operations in August 2020 and will pilot services for the grocery and fashion categories. Flipkart Wholesale is expected to draw on the merchandising experience of the Walmart India team. Currently, Walmart India’s team is among the largest cash and carry businesses and has more than 1.5 million customer base, including kiranas, HoReCa and other MSMEs. It also has multiple supplier diversity and development programmes.
“With the launch of Flipkart Wholesale, we will 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 expertise in the wholesale business that will strengthen our position to address the needs of kiranas and MSMEs uniquely,” said Kalyan Krishnamurthy, CEO, Flipkart Group, on the acquisition of Walmart India.
With the acquisition, the employees of Walmart India are expected to join the Flipkart group and the home office teams will be integrated over the next one year. However, as experts point out, every acquisition brings in challenges.
“During a merger or acquisition, managers have to juggle a lot in trying to integrate new teams, and mergers and acquisitions can also result in job losses with some areas getting redundant in the combined company. There is excitement and uncertainty, especially in areas where they don’t know how plans will change. And this uncertainty can create stress levels and also signal risk to company employees. Although there is little an organisation can do to avoid the emotional reactions of the employees, there are ways to mitigate by implementing best practices before, during, and after the merger or acquisition,” Amit Vadera, Head Staffing - BFSI and Govt, TeamLease Services told THE WEEK.