Walmart Sells Its Indian Stores to Flipkart
July 23 2020 - 2:29AM
Dow Jones News
By Sarah Nassauer
Walmart Inc. is selling its Indian stores to Flipkart, the
e-commerce startup it controls, consolidating its operations in the
world's second-most-populous country as it works to fend off
Amazon.com Inc.
Walmart operates 28 warehouse-club-style stores in India that
are only open to members. Branded as Best Price Modern Wholesale,
the stores serve independent retailers and other small businesses.
Indian regulations prohibit Walmart from operating supercenters or
selling its own inventory directly to consumers through its
websites.
Flipkart will buy Walmart India, adding the wholesale business
and around 5,200 employees to its e-commerce and other operations,
creating a Flipkart Wholesale business later this summer, Walmart
said. A Walmart spokesman declined to share financial terms of the
deal.
In 2018 Walmart bought a roughly 77% stake in Flipkart for $16
billion--the U.S. giant's largest-ever acquisition. Last week
Walmart said it led another investment round in the startup for
$1.2 billion, raising Flipkart's valuation to $24.9 billion.
Walmart's stake in Flipkart increased after the investment round,
said a person familiar with the situation.
Amazon is also pushing aggressively to grow its business in
India, investing billions of dollars to compete.
But both American behemoths have bumped up against regulatory
hurdles in the country, as well as the challenge of navigating a
fragmented retail space made up primarily of small, independent
retailers.
Soon after Walmart sealed its investment in Flipkart, India
altered its rules for online sales by foreign-owned retailers,
forcing Amazon and Walmart to rewire their supply chains. The rules
don't apply to local rivals.
Flipkart aims to use Walmart's wholesale business to work more
closely with independent retailers in the country, offering more
products and services such as financing, the company said. Walmart
India CEO Sameer Aggarwal will remain during a transition period,
then move to another role within Walmart, the company said.
Walmart opened its first membership-based wholesale outlets in
India in 2009, with hopes it would eventually be allowed to open
stores available to all shoppers.
Walmart, which had $520 billion in net sales globally last
fiscal year, doesn't break out sales from India, which is a small
part of its international operations. The country is included with
Africa, South America, Japan and other international markets that
generated a collective $28.5 billion in net sales last fiscal
year.
The U.S. giant has been revamping its international operations,
selling its e-commerce operations in China in 2016 to JD.com,
selling 80% of its Brazil store business in 2018 to a
private-equity firm, and most recently reviving efforts to find a
buyer for its Asda grocery-store chain in the U.K.
Write to Sarah Nassauer at sarah.nassauer@wsj.com
(END) Dow Jones Newswires
July 23, 2020 02:14 ET (06:14 GMT)
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