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Walmart-owned e-commerce giant Flipkart’s first integrated logistics hub, set to come up in West Bengal, is expected to be operational by mid-2021. Similar logistics hubs are also being explored in other parts — one each in North, South and West, sources said.
Located on the outskirts of Kolkata, the hub – expected to house several warehouses – is coming up at a cost of ₹1,000 crore and will be the first of its kind project by the e-tailer. Land acquisition has already happened and construction is on.
Trimming the cost
Market sources say, the hub will improve delivery time of goods, especially, larger ones. It will also bring down logistics cost by bringing down multiple players in the ecosystem. The hub will also end-up being the nerve centre across eastern States and the North East — two regions where the company is witnessing increased demand.
Apart from West Bengal, the e-commerce major is reportedly in talks to set up a similar logistics park on the outskirts of Bengaluru.
Incidentally, arch rival Amazon runs one of the largest warehouses located in Telangana.
“We are on track with our West Bengal project and by middle of next year the logistics hub should be operational,” Rajneesh Kumar, Chief Corporate Affairs Officer, Flipkart India, told BusinessLine. He, however, did not confirm if similar hubs are being looked into across other parts of the country.
Listing plans
According to Kumar, the company is currently investing in infrastructure that will be aiding its future growth. A long-term view has been taken on growth rather than merely focussing on profits.
“If you say we are burning cash, then one must also consider these investments were making towards infrastructure that will aid future growth. Obviously, once there is growth, everything else (profits) will follow,” he explained.
Flipkart, incidentally, has already expressed its desire to tap the US equity markets (IPO plans) over the next 2-3 years. For a 13-year-old company, the Bengaluru-based entity is already considered a successful Indian consumer internet story. Going public, sources say, ensures further liquidity for investors and employees. Reports have suggested that Flipkart has been offering ESOPs to retain senior and mid-level talent.
Value play
According to Kumar, a current slump in demand (because of slowdown) often helps out e-tailers like Flipkart as consumers shift online seeking “better value propositions”. “Because of our value proposition, we have been getting more business in times of the slowdown,” he maintained.
He maintained that the company was focussing as a “value player” with smaller towns driving growth. Incidentally, nearly 60-70 per cent of its seller base as well as total business (gross sales) come from non-Tier-I towns. Fashion (apparels) is among the highest sold categories.
The company was also making “healthy double digit” additions to its seller base and was also bringing on board a number of local artisans to promote their work. The company has been growing its seller base, that includes MSMEs, via direct reach and through collaboration with industry bodies. Nearly, 200,000 MSMEs are on-board as sellers.
Similarly it is roping in artisans and has come up with the Samarth programme (for on-boarding, cataloguing, etc). It is also working with NGOs and State governments for sourcing.