Flip­kart to of­fer its lo­gis­tics ser­vices to e-com­merce firms

The Pak Banker - - COMPANIES/BOSS -

Flip­kart Ltd, the coun­try's largest on­line re­tailer, has thrown open its lo­gis­tics ser­vices eKart to third-party e-com­merce firms even as the com­pany is gear­ing up to roll out an in­ter-city cus­tomer-to-cus­tomer courier ser­vice called eFlash in the next two months, said three peo­ple aware of the de­vel­op­ment.

The e-com­merce lo­gis­tics ser­vice has al­ready found tak­ers such as on­line fash­ion store Jabong and on­line mar­ket­place Shopclues (Clues Net­work Pvt. Ltd); tech­ni­cal in­te­gra­tion with Jabong is un­der­way, while Shopclues will come on board in the next two weeks. eFlash is still in beta stage, cur­rently avail­able only to Flip­kart em­ploy­ees in Ban­ga­lore, the peo­ple cited above said. Myn­tra, which was ac­quired by Flip­kart for $330 mil­lion in May 2014, has al­ready been us­ing eKart's lo­gis­tics ser­vices since Septem­ber last year. The com­pany ex­pects other e-com­merce firms to adopt the ser­vices in a big way start­ing Fe­bru­ary.

Flip­kart did not re­spond to an email seek­ing com­ments, at the time of fil­ing the re­port. eKart's lo­gis­tics ser­vice for third-party etail­ers will be pitched against well-funded e-com­merce-fo­cused lo­gis­tics firms such as Del­hivery (SSN Lo­gis­tics Pvt. Ltd), Ecom Ex­press Pvt. Ltd and Dotzot, the e-com­merce fo­cused arm of DTDC Ex­press Ltd, among oth­ers. Other tra­di­tional lo­gis­tics com­pa­nies such as Gati Ltd, Blue Dart Ex­press Ltd, Saf­ex­press Pvt. Ltd and Drive In­dia En­ter­prise So­lu­tions Ltd are all adding e-com­merce ver­ti­cals to their ex­ist­ing lines of busi­nesses, given the ex­po­nen­tial growth of e-com­merce in In­dia.

On­line retail sales could touch be­tween $48 bil­lion and $60 bil­lion by 2020 from $4.47 bil­lion in 2014, ac­cord­ing to a re­port by fi­nan­cial ser­vices firm UBS Group AG in April last year. While Flip­kart plans to ag­gres­sively scale up e-com­merce lo­gis­tics ser­vices, the com­pany will be a lit­tle cau­tious on eFlash, as it is yet an un­proven ter­ri­tory, said one of the three peo­ple cited above. The seg­ment has seen the emer­gence of a num­ber of courier ag­gre­ga­tors-at least 15 of them-in the past 12 months, such as Pickrr, Shipsy, Par­celled, DaakNinja, ShipTickr and Pi­gen. How­ever, none of the busi­nesses have yet seen much trac­tion in courier ag­gre­ga­tion and make most of their rev­enue from first­mile lo­gis­tics for small and medium en­ter­prises (SMEs), trans­port­ing goods from the mer­chant to a cus­tomer or the ware­houses of e-com­merce com­pa­nies. Some of them also han­dle re­verse pick-up for e-com­merce com­pa­nies.

"We have been work­ing on th­ese two ser­vices for at least six months. Af­ter the in­te­gra­tion with Myn­tra, we came up with a pro­fes­sional rate card for third-party com­pa­nies. We will also ex­pand the in­fra­struc­ture to meet the de­mand," said one of the two per­sons cited above, on con­di­tion of anonymity. Ac­cord­ing to in­dus­try ex­perts, a full-fledged roll-out of the ser­vice to other e-com­merce com­pa­nies will re­quire Flip­kart to ramp up its in­fra­struc­ture sub­stan­tially as most of the e-com­merce com­pa­nies strug­gle to ful­fil or­ders on time, es­pe­cially be­yond the tier I cities, dur­ing spe­cial sale events when vol­umes spike sig­nif­i­cantly.

Ques­tions may arise over eKart's abil­ity to ser­vice other com­pa­nies at a time when Flip­kart's vol­umes also surge sharply. "At some point, when a busi­ness scales up, they try to ex­tract value from their core ca­pa­bil­i­ties. At the op­er­at­ing level, such a move adds value be­cause it will bring more busi­ness, but ex­ist­ing in­fra­struc­ture needs to be ramped up," said Har­ish H.V., part­ner at Grant Thorn­ton, a con­sult­ing firm. Lo­gis­tics and sup­ply chain has be­come a key fo­cus for all ecom­merce com­pa­nies as sound in­fra­struc­ture helps in re­duc­ing de­liv­ery cost and en­sure faster de­liv­ery, which in turn helps ecom­merce firms win over cus­tomers. But even Flip­kart's ri­vals Ama­zon (Ama­zon Seller Ser­vices Pvt. Ltd) and Snapdeal (Jasper In­fotech Pvt. Ltd) are not sit­ting idle.

The lo­gis­tics foot­print of Ama­zon In­dia grew three times to more than 2,100 cities and towns in 2015 and the com­pany added eight ware­houses last year, in­creas­ing its count to 21. It has the max­i­mum num­ber of ware­houses and largest stor­age space among e-com­merce firms in In­dia, ahead of Flip­kart, which has 17. Snapdeal has bought a large stake in spe­cialty lo­gis­tics firm Go­Javas to im­prove its speed of or­der de­liv­er­ies. The e-com­merce com­pany has in­fused about Rs.237 crore in Go­Javas for a 42% stake, Mint re­ported on 2 Oc­to­ber 2015.

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