The Flipkart-Snapdeal merge will be one of the biggest events in Indian ecommerce history. It will leave only two major powers (Amazon and Flipkart) in online retail to battle for ecommerce supremacy, like experts suggested.
With Snapdeal playing for Flipkart’s team, the latter has the advantage of a larger customer base, more sellers and an even larger variety of products. When it acquired foreign competitor eBay, it received the same benefits. But, what eBay didn’t bring along with it, Snapdeal will apparently.
Vulcan Express to go to Flipkart too
According to reports, the logistics subsidiary fully owned by Snapdeal, Vulcan Express will be included in the likely merger deal between the two ecommerce superpowers. The logistics arm was established in 2013. It covers online retail requirements from end to end logistics to supply chain solutions.
Its services include –
- Product pick-ups
- Consolidation facilities
- Fulfilment operations
- Warehousing solutions
- Inter-city movement
- Last mile delivery
In 2015, Snapdeal invested $3.75 million in the logistics provider. By August 2016, Snapdeal launched through Vulcan six new logistics hubs all over the country. This year in March, the logistics company said it will be expanding its logistics network across 80 major cities in India.
Flipkart may expand its supply chain
India’s largest etailer, Flipkart has Ekart, a supply chain of its own. But, it still needs the services third-parties to cover its logistic needs. Vulcan Express caters to 100+ cities. For Snapdeal, Vulcan completes 55% of its deliveries and the rest are outsourced, revealed a report.
As per opinions from RedSeer Consulting, the research and advisory firm, Flipkart will benefit big with access to Snapdeal’s supply network.
“This deal gives Flipkart a way to expand its supply chain reach quickly and inorganically by getting access to Snapdeal’s numerous small and big warehouses, especially in Northern India. Fast deliveries and regional fulfilment of orders have become crucial for etailers to achieve both higher customer satisfaction and lower supply chain costs. And this move by Flipkart would be a significant boost in its quest for supply chain leadership over Amazon, which is aggressively expanding its supply chain network,” the research company mentioned in a statement.
Two anonymous sources with knowledge of the merger developments disclosed that the decision to merge Ekart with Vulcan will be taken when the final terms are determined.
“Flipkart outsources despite having its own logistics arm, and it won’t hurt the online retailer to extend its services via Vulcan,” one of the sources was quoted.
Other entities under Snapdeal include Freecharge and Unicommerce. Paytm signed a non-exclusive term sheet for acquisition exploration and is expected to be working towards to make the deal a reality. However, MobiKwik has also shown interest in the payment platform. But, if all things go well with Flipkart could Freecharge end up with the etailer? After all, Flipkart does have sufficient funds, which it plans to experiment with on its payment arm and other areas of business.