Flipkart logistics arm Ekart bets big on offline clients, bags Madura Fashion
Madhav Chanchani & Aditi Shrivastava | ET Bureau | Apr 11, 2016, 11.25 AM IST
BENGALURU: Ekart, the logistics arm of Flipkart, has started winning clients among brick-and-mortar consumer brands as it aims to become an independent logistics powerhouse which can financially boost its online retailer parent.
Working with large offline retailers is of a piece with the strategy driven by Flipkart's new chief executive officer Binny Bansal, who is looking to position the unit as a standalone business.
In recent weeks, Ekart has started delivering shipments for rival online retailers such as Paytm, Jabong and ShopClues, and it has now won its first major brick-and-mortar customer in the form of Aditya Birla group venture Madura Fashion & Lifestyle, said sources familiar with the development.
"Ekart is looking to rope in a total of 30-50 large clients by the end of the year," said Amitesh Jha, a vice president at Ekart, who declined to name the clients that EKart is working with.
The bulk of the third party clients clients for Ekart this year is expected to come from offline retailers and brands which are seeking to build a so called "omni-channel" strategy that involves selling both at a store and on online platforms.
Apparel maker Madura owns brands like Van Huesen & Allen Solly, besides multi-brand outlet chain Planet Fashion and fashion e-tailer Trendin.
A representative for Aditya Birla Retail did not reply to email queries from ET for this story. Jha declined to name clients Ekart is working with.
Creating strong revenue streams is particularly important for market leader Flipkart, as it seeks to raise fresh capital while defending its valuation of $15 billion. The company, which counts New York-based investment firm Tiger Global as its largest shareholder, is battling a host of well-funded rivals from Jeff Bezos's Amazon to the SoftBank- backed Snapdeal.
"We want to be best supply chain provider in India," said Jha, a five-year veteran at Flipkart who earlier oversaw the mobile and electronics category.
"The importance of scale is there but importance of technology differentiator is higher," he said.
India's online retail market is expected to be worth $36 billion in 2016-17 according to Goldman Sachs.
Online retailers alone are expected to provide a lucrative opportunity for logistics providers, according to a recent report by IIFL, which projects that order volumes for e-commerce shipments will have increased 13-fold between 2014 and 2020. "We believe overall volume of e-commerce orders will amount to 2,000 tonnes per day by CY20," it said.
Ekart, which is owned by an entity called Instakart Services Private Limited, will offer clients a variety of supply chain solutions ranging from delivery of goods to offline stores and multi-brand outlets, besides shipping to consumers. The company expects the business to business (B2B) segment, which will also include movement of goods between warehouses, to become sizable.
By next year, Ekart expects shipments from non e-commerce businesses to contribute to half its revenue. E-tailing delivery for third-party players is being done under an initiative called Fulfilled by Ekart (FBE), which according to Jha "is a holistic omni channel fulfillment service."
Experts are of the view that that Ekart has already built more logistics capacity than any of its rivals in the online retail industry.
Working with large offline retailers is of a piece with the strategy driven by Flipkart's new chief executive officer Binny Bansal, who is looking to position the unit as a standalone business.
In recent weeks, Ekart has started delivering shipments for rival online retailers such as Paytm, Jabong and ShopClues, and it has now won its first major brick-and-mortar customer in the form of Aditya Birla group venture Madura Fashion & Lifestyle, said sources familiar with the development.
"Ekart is looking to rope in a total of 30-50 large clients by the end of the year," said Amitesh Jha, a vice president at Ekart, who declined to name the clients that EKart is working with.
The bulk of the third party clients clients for Ekart this year is expected to come from offline retailers and brands which are seeking to build a so called "omni-channel" strategy that involves selling both at a store and on online platforms.
Flipkart buys payments venture PhonePe
Flipkart has acquired Bengaluru-based mobile payments company PhonePe, multiple sources close to the development told TOI. The value of the transaction could not be ascertained.
Apparel maker Madura owns brands like Van Huesen & Allen Solly, besides multi-brand outlet chain Planet Fashion and fashion e-tailer Trendin.
A representative for Aditya Birla Retail did not reply to email queries from ET for this story. Jha declined to name clients Ekart is working with.
Creating strong revenue streams is particularly important for market leader Flipkart, as it seeks to raise fresh capital while defending its valuation of $15 billion. The company, which counts New York-based investment firm Tiger Global as its largest shareholder, is battling a host of well-funded rivals from Jeff Bezos's Amazon to the SoftBank- backed Snapdeal.
"We want to be best supply chain provider in India," said Jha, a five-year veteran at Flipkart who earlier oversaw the mobile and electronics category.
"The importance of scale is there but importance of technology differentiator is higher," he said.
India's online retail market is expected to be worth $36 billion in 2016-17 according to Goldman Sachs.
Online retailers alone are expected to provide a lucrative opportunity for logistics providers, according to a recent report by IIFL, which projects that order volumes for e-commerce shipments will have increased 13-fold between 2014 and 2020. "We believe overall volume of e-commerce orders will amount to 2,000 tonnes per day by CY20," it said.
Ekart, which is owned by an entity called Instakart Services Private Limited, will offer clients a variety of supply chain solutions ranging from delivery of goods to offline stores and multi-brand outlets, besides shipping to consumers. The company expects the business to business (B2B) segment, which will also include movement of goods between warehouses, to become sizable.
By next year, Ekart expects shipments from non e-commerce businesses to contribute to half its revenue. E-tailing delivery for third-party players is being done under an initiative called Fulfilled by Ekart (FBE), which according to Jha "is a holistic omni channel fulfillment service."
Experts are of the view that that Ekart has already built more logistics capacity than any of its rivals in the online retail industry.
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