Flipkart to pump $2.5B to expand logistics network; Ekart dabbles in hyper-local delivery

Indian etailer  flipkart believes that a strong logistics and delivery network would enable them to win the ecommerce war. And hence, the Bansals-led company is focusing on two things – expanding their logistics network by opening more fulfilment centres and expanding Ekart’s delivery business to make it a profitable independent entity.

Flipkart will invest $2.5 billion in logistics in the next few years

The ecommerce giant’s plan is to pour a whopping $2.5 billion into its logistics network in the coming few years.  From the total investment, the company will spend $500 million to build approximately 80 to 100 fulfillment centers in the next 4-5 years.

The idea is to weave a wide & well-connected network across the country and introduce innovative technologies to automate its logistics business function.

“Logistics network is the biggest differentiator. A logistics network presents “strong competitive advantages”, which is why it will be the “biggest investment area” for the company,” revealed Flipkart’s CEO Binny Bansal.

Ekart to handle hyper-local delivery for companies

The etailer entered the on-demand grocery business with Nearby in October 2015. But in just 4 months, the service was shut. Now Flipkart is looking to enter the hyper-local industry once again, via its logistics arm Ekart.  

Ekart has collaborated with a few companies to handle on-demand deliveries. This is aligned with their diversification strategy to make the company a self-sustaining independent venture for the marketplace.

Besides tying up with other ecommerce companies to fulfill delivery, Ekart started a customer-to-customer (C2C) delivery service in May this year.

Flipkart’s logistics unit’s head Saikiran Krishnamurthy said,

“We are constantly investing in improving and expanding our logistics power, from opening new warehouses to reducing average delivery time. We have managed to reduce our per shipment delivery cost by 30%. We have about 10 online firms using Ekart and we are expanding our offline client base as well.”

The low-on-cash company is looking to raise funds to fulfill its logistics dream but amidst constant devaluation, will it manage to get money from the investors? And would Ekart’s hyper-local venture be successful, when other on-demand delivery services are struggling to maintain cash in-flow and service standard?