Flipkart is opening up its logistics arm eKart Logistics to other operators and is currently running a pilot programme with an intention to roll out these services in the next few weeks, reports Economic Times.
The e-commerce company created eKart as a separate brand to serve WS-Retail, the B2C side of FlipKart, in April last year and currently reaches consumers in about 150 cities. eKart currently offers services such as delivery logistics, reverse logistics and pay on delivery. It also offers customer support and technology integration for order tracking, customer notifications, reporting and analysis, billing etc. We’ve mailed Flipkart some questions, and will update when we get a response.
Nikhil adds: It will be critical for Flipkart to assure its competitors that the logistics division isn’t just independent of its marketplace business, but also seen as independent. It’s the same challenge the company faces with its payment gateway business Payzippy: competing marketplaces might see both initiatives as means of gathering information on consumer demand in specific parts of the country and competitive information on what consumers are buying from competition, at the very least.
Everyone’s doing it
Most e-commerce companies in India currently offer logistics support for merchants listed on its website. Kartrocket had opened up its stand alone delivery service Shiprocket to all operators. Courier company DTDC Couriers & Cargo had also launched a new specialized e-commerce logistics initiative called DotZot in March this year.
In December 2012, Rocket Internet-backed Jabong had launched third-party logistics service called JaVAS (Jabong Value Added Services). It later on sold it to Gurgaon-based QuickDel Logistics. Other competitors in this space would include Delhivery (SSL Logistics) which had acquired offline cash collection network of Gharpay and had recently raised a round of funding, Holisol and Mudita, among others. Logistics companies like Bluedart and Aramex also have dedicated e-commerce divisions.
Flipkart’s competitors in the e-commerce space however, currently offer logistics service only to merchants selling through their website. Amazon had launched a pilot project to test India Post’s cash on delivery model through which, India Post will collect payment from its customers. It had also launched its third-party logistics service in India starting with a pilot in Delhi-NCR region that lasted until February. In June 2013, online Marketplace Snapdeal had launched a fulfillment platform for sellers listing their products on Snapdeal.com, known as SafeShip.
JustDial, the mobile and online business listings business, also plans to offer its merchants the ability to deliver products purchased from its marketplace in the next quarter. The company made the announcement during the conference call after announcing this quarter’s results.
It’s worth noting that in our #Outlook14 series on what e-commerce companies plan to do in 2014, most of the companies had said that delivering goods in a short time frame was a challenge that they were working on.
Impact on courier companies
In its submission to the Indian government on the need for FDI in e-commerce, Yebhi had stated that e-commerce accounts for 15-20% of the total revenues for some of the logistics companies. It also said that these revenues may grow by 70 times to $2.6 billion by 2020.
Now, if e-commerce companies start building out their own delivery networks and keep expanding them to offer on par or better coverage than these courier companies, it will seriously affect their revenues. However, this will take some time as courier companies currently have a better network. DotZot for example, covers 8,000 pin codes and 2,300 cities in the country as opposed to 150 covered by eKart. That said, Flipkart has enough money in its coffers to invest in building the delivery infrastructure.