eKart to serve offline players now

In a move that is bound to transform the logistics industry in India, Flipkart’s logistics arm eKart is now going to serve non-e-commerce players as well. eKart confirmed the move with YourStory, just days after it announced its partnership with Paytm. It is currently in talks with Jabong and Shopclues to explore tie-ups, company sources add.

eKart will be harnessing its learning experience with grocery delivery service ‘Nearby’, which shut down recently, to look into food and grocery delivery. It is also in talks with large electronics and apparel brands. This step by eKart, many believe, could transform the way Indian e-commerce system functions.

The relevance of offline play
Those logistics players that did not think they could provide a relevant solution for non-e-commerce businesses may have lost out on this opportunity by focussing too much on e-commerce. This clearly would give eKart an edge over other logistics companies.

Consumer companies are also trying to take their products to households. According to logistics consultant Alvarez & Marsal India Private Ltd, many offline players today lose close to 30 percent of their sales because their stocks do not reach the end retailer on time. This last-mile solution, therefore, will prove to be very relevant for them.

Amitesh Jha, Vice President, eKart explains how working for Flipkart over the years has helped the company strengthen its offering. He says, “Over the years, eKart has been working towards understanding and solving the various inefficiencies and supply-chain issues Flipkart faces. With time we believe that we have built a robust system that can work as a business enabler and help provide efficiency for different businesses.”

Despite its recent devaluation by Morgan & Stanley, Flipkart is still ranked as one of the largest e-commerce players in the country. In terms of scale, eKart is believed to be the largest e-commerce-focussed logistics firm. By opening up to non-e-commerce players, grocery and even C2C courier service, it is taking a step towards what many logistics players are already doing in the US.

However, Manish Saigal, Managing Director, Alvarez & Marsal India Private Ltd, adds that one of the biggest issues in the industry is achieving economies of scale. eKart has already achieved that economy of scale in several centres.

Can eKart get the big boys?
Does this mean that eKart may even tie up with its parent company’s rival Snapdeal? One cannot deny the volumes that Amazon and Snapdeal can contribute. Comparing eKart to Alipay, Amitesh explains that while Alibaba may be in competition with several players, its payment gateway and wing aren’t in competition. “This idea might take some time for the industry and ecosystem to understand; but it is a common global phenomena,” he says.

Even if Snapdeal [which has partnered with 20 third party logistics players] and Amazon [which has its own in-house logistics system] shy away from associating with eKart, smaller players do not see Flipkart as competition. They would be more worried about ensuring their data is not leaked or misused. So, the governance structure and control around using their data on transactions and movements will help eKart gain adequate trust.

Another challenge would be building the network; eKart has largely focussed on last-mile delivery so far. There is still some way to go to setting up its own surface network.

Can eKart create a robust line-haul?
Today, most big logistics companies have already started building their own line-haul network. eKart is currently looking at different data and algorithms to figure out the best service providers. Amitesh adds that they have been able to figure out an ecosystem solution for the line-haul.

Sudhanshu Gupta, Vice President, Paytm, says that his company has created a technology platform that integrates different national and regional courier partners to provide a countrywide reach to sellers, making the model efficient. eKart, which acts as an independent third-party logistics provider, will join Paytm’s list of other courier partners, like Delhivery, Gojavas and Bluedart.

“The volume allocation, however, will happen through smart routing algorithms based on implied cost and performance on each route by a courier partner. It is not possible to comment on what that percentage would be,” adds Sudhanshu.

Source: techgig.com