Ekart, Flipkart’s logistics unit, is set to launch a courier service that will take on the likes of DTDC Express and First Flight Courier, as it builds a consumer-facing vertical to complement its core supply-chain management business.
The courier service will help bolster Ekart’s new positioning as an independent logistics powerhouse, with Flipkart recently deciding to hive off the unit to allow it to cater to other companies. Ekart’s clients now include Madura Garments as well as online retailers Jabong and Paytm.
Ekart has aggressive plans for its courier service, with an aim to capture 5-10 per cent of the market in the first year. Ekart Courier, which pegs the size of the consumer-to-consumer courier market at Rs 2,200 crore, expects revenue of more than Rs 200 crore in the next one year, effectively squeezing out more revenue per delivery executive.
“We expect this service will be as disruptive as Flipkart’s entry into the ecommerce space,” said Amitesh Jha, vice-president at Ekart. “The industry is still very unorganised. No one provides an end-to-end proposition that consumers want.”
Ekart has plans also to enter the hyperlocal logistics market and has started piloting deliveries for restaurants in Bengaluru, according to two people aware of the company’s plans. Jha declined to comment on this.
Ekart Courier will provide customers door-to-door pick-up of parcels in under 4 hours and delivery in two days. Customers can book the service online and get real-time tracking and SMS updates. Ekart will offer complimentary packaging.
The pick-up service will be rolled out in Bengaluru next week and in 50 other cities by September. Ekart Courier will drop parcels at any of the 3,800 pincodes it directly reaches across the country.
Jha did not disclose the pricing but said it will “be competitive to tier-1 courier players. We will be offering far more value for the same cost.”
Experts tracking the logistics space say the courier market is highly competitive with thousands of regional and national players, which makes generating profits from the service a tough proposition. They pointed out that courier companies handle about two million shipments a day with networks of thousands of branches. Parcel sizes are typically less than half a kilogram, whereas ecommerce parcels are usually 1-2 kg.
“Courier market is very pricesensitive. Typically, the yield players get in the courier market is Rs 15-25 per delivery. But for etailing-focused logistics players, the cost structure is way too high to address that market because they get around Rs 85 yield per delivery and are still not profitable,” said Manish Saigal, managing director at consulting firm Alvarez & Marsal.
Jha said he is not worried about the competition and that he expects Ekart’s entry to expand the courier market and increase the number of packets delivered by each delivery executive. “Every additional item increases utilisation (of the executive),” he said. Ekart has about 15,000 delivery executives.
For its core business-to-business logistics facility, Ekart is aggressively seeking external clients and 50 companies have expressed interest in its services, Jha said. “We will have six customers in ecommerce and four in the normal B2B business boarded by June,” he said.
By next year, Ekart expects shipments from non-ecommerce businesses to contribute to half its revenue. The company handles deliveries for third-party online retailers under a new initiative called Fulfilled by Ekart.
NewsletterA A Weston Richburg Womens Jersey