Flipkart is acquiring parent Walmart Inc’s local cash-and-carry business as the e-commerce giant strengthens its wholesale operations to compete better with Amazon and other players.

The deal will allow Flipkart to launch a digital marketplace called Flipkart Wholesale next month, the Bangalore-based company said, without disclosing any financial details of the transaction.

A week ago, Flipkart announced it had raised $1.2 billion in funding from a Walmart-led investor group.

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

Best Price has 28 wholesale stores, two fulfillment centres and more than 1.5 million members, largely comprising small grocers. However, Walmart has not been able to make money from this business.

The Flipkart deal comes as e-commerce players, including Amazon, look to win over the small grocers 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. Walmart India employees will join the Flipkart group as part of the deal.

Flipkart Wholesale will, therefore, be a new digital marketplace focusing on addressing the business-to-business (B2B) segment in India.

“This marketplace is going to effectively link sellers and manufacturers on one end and kiranas and micro, small and medium enterprises (MSMEs) on the other end,” said Adarsh Menon, Flipkart’s senior vice-president and head of Flipkart Wholesale.

A statement from Flipkart said small grocers and MSMEs are key to India’s retail ecosystem, Flipkart Wholesale will focus on meeting their needs by providing small businesses a wide selection at a significant value that is powered by technology.

According to Flipkart, small grocers and MSMEs will benefit from access to easy credit options and opportunities for new income generation. The business will also use the Flipkart group’s vast supply chain infrastructure to reach the small outlets and MSMEs across the country.

Best Price currently supports more than 1.5 million members, including small grocers and other MSMEs.

Kalyan Krishnamurthy, chief executive officer, Flipkart Group, said: “As the e-commerce pioneer in India, the Flipkart group has transformed the shopping experience for millions of Indian consumers. 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 expertise in the wholesale business that will strengthen our position to address the needs of kiranas and MSMEs uniquely. With this development, Flipkart Group will further build upon the synergies across its businesses to drive greater value and choice for end-consumers and businesses alike,” he said.