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Walmart Sells Indian Wholesale Business to E-Commerce Giant Flipkart

By Rich Duprey – Updated Jul 24, 2020 at 9:07AM

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The deal allows the Walmart-owned business to better compete against Amazon.

Walmart (WMT -2.70%) announced today it was selling its warehouse club-style Best Price Modern Wholesale business to the Flipkart Group, the Indian e-commerce giant in which Walmart has a majority ownership interest. The move will allow Walmart to position itself in India to better take on (AMZN -5.23%).

The sale will allow Flipkart to launch a new digital marketplace called Flipkart Wholesale, set to open next month, which will use its vast supply-chain network to offer kiranas and small- and medium-sized businesses (SMBs) access to an "exhaustive" range of merchandise and easy credit options. Kiranas are small family-owned stores that sell groceries and other goods.

Indian flag on a computer keyboard

Image source: Getty Images.

Going where the growth is

India is the second-largest e-commerce market after China, and one of the world's fastest-growing economies. The local mom-and-pop business is attracting attention from tech giants like Alphabet's Google and Facebook, both of which have invested billions of dollars in telecom and internet provider Jio Platforms.

Earlier this year, Amazon announced it would be investing $1 billion to help SMBs develop e-commerce platforms of their own.

Walmart bought a 77% stake in Flipkart in 2018 for $16 billion, but the Indian government quickly slammed the brakes on how much control it and Amazon could actually wield in the country. So Walmart has been building up the homegrown Flipkart and last week led a round of financing for the e-commerce leader that saw it raise $1.2 billion, increasing Flipkart's valuation to $24.9 billion.

Walmart's Best Price chain of 28 membership-based stores has more than 1.5 million member kiranas, SMBs, and independent retailers. There were no financial details released with the announcement of the sale.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, and Facebook and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool has a disclosure policy.

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