When Sachin and Binny Bansal founded Flipkart in 2007, they often ended up jumping on their own vehicles in the initial months to make deliveries. While Flipkart showed plenty of promise early on (first as an online book seller and then foraying into dozens of other categories), the founders discovered that the backend wasn’t strong enough to keep pace with their ambitious plans.
So the duo founded Ekart, a distinct logistics business, to keep pace with exploding orders. What started off with barely a dozen people in 2010, has today grown into a meaty business for the parent, with some 15,000 feet on the street and a couple of thousand managers administering the staff. “We wanted logistics partners to support cash on delivery and returns, which was absent or evolving in the industry,” says Neeraj Aggarwal, senior director, delivery operations, Flipkart. “This was absent and we ended up building our own expertise.”
As Flipkart has made some inroads into the logistics market with its own business, the top management has also begun to think of life beyond the parent. This will be done not only by looking for business from competing ecommerce companies, but also by extending Ekart into new industries too, says Aggarwal.
“By 2020, ecommerce alone should give Ekart revenues of $2.5 billion,” he says. “We will be very disappointed if we aren’t able to open up newer lines of business by then and build a much larger business.” Already, Flipkart has made some investments to catalyse growth in its logistics unit. It has backed MapmyIndia, an online mapping solutions provider, and Blackbuck, an online logistics market place, in December 2015.
“Logistics, according to some reports, will be a $250-300 billion opportunity in the next five-six years,” Aggarwal says. “We want to evolve into a major player in this booming market.”
Flipkart’s bullishness is driven by the fact that the industry it seeks to explore is dominated by small players with little or no use of technology and engineering services to improve their business. Additionally, legacy logistics players have been slow to tap the demand from ecommerce companies, allowing the likes of Ekart to come up and thrive. “The largest four or five players will account for no more than $3-4 billion of an industry that is expected to be $100 billion in size,” says Aggarwal. “There’s an opportunity to make a major dent in this market.”Share This