Flipkart rethinks logistics strategy; major delivery companies hike rates

Editor | Sep 09, 2020

With Binny Bansal taking over as CEO of Flipkart, he seems to be making some modifications in the functioning of the ecommerce company. For starters, he is attempting to merge the logistics wings of Flipkart and Myntra. Currently, Myntra uses the in-house logistics arm Myntra logistics, Flipkart’s Ekart and other leading logistics companies like Blue Dart to deliver its consignments.

Unifying resources to get the best

Bansal’s move is to pool the common resources like warehouses and vehicles to make the best use of them.

Binny had been looking to merge the independent logistics entity of Myntra with that of Flipkart,” says a person familiar with the developments.

The intention is to merge resources in logistics and warehousing.

“These are two key cost metrics. If you already have an entity like Ekart which is also shipping Myntra products, it is natural for the parent to merge it with the larger entity. On the first-mile and last-mile logistics, there is a massive scope for supply chain and logistics optimization,” said the person on condition of anonymity.

Ties up with dPronto

Flipkart has apparently invested in Blackbuck and QikPod to propel its logistics plans ahead. It has also announced a special tie-up with logistics firm, dPronto. The company runs the Empower Pragmati programme, where it teaches under privelleged youth from rural areas and trains them in major areas of the ecommerce sector. Flipkart is aiming to tap this talent for improved last mile delivery.

“We see this as the time to bring in new supply in the form of skilled delivery boys. In the next 18 months, we will train 10,000 of them,” stated Rajiv Sharma, founder, dPronto.

Hyper local delivery firms looking to recover expenses

In the meanwhile, leading hyper local delivery firms are slowly and subtly hiking their delivery costs. Leading logistics companies like Opinio, Shadowfax and Roadrunnr are looking at the services and technology.

Says Mayank Kumar, CEO of Opinio, “Last year we had invested in creating a market and proved that food deliveries can be efficiently done in less than 20 minutes. This year, we will monetise our tech capabilities and fleet to efficiently scale our logistics capabilities.”

Initially, delivery charges were Rs. 15 to Rs. 20 and even free in some cases, but logistics companies are realising that they need to sustain their operations as well.

“Since July 2015, we have stopped doing free deliveries for small merchants and usually do that for large chains or aggregators who can promise up to 500 orders per day,” says Mohit Kumar, CEO of Roadrunnr.

In order to run a profitable enterprise, any business will have to make a loss initially. However, enablers of online commerce are slowly realising that to make any money, they will have to start hiking their charges.

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