Binny Bansal to strengthen logistics play for Flipkart

The logistics team is the only one that has not ben restructured after Binny took over

Binny Bansal (pictured), co-founder and newly appointed chief executive of Flipkart, will retain control of the logistics arm as India’s largest e-commerce player looks to drive revenues by opening it up to outside customers and building a consortium of logistics players.

Flipkart restructured teams in its retail and marketplace divisions soon after Binny Bansal took over from friend and co-founder Sachin Bansal. Myntra co-founder Mukesh Bansal, who headed the commerce platform, will manage the advertising business that Sachin Bansal incubated. Logistics, driven by Binny Bansal, is the only part of the business that has not seen change.

A Flipkart spokesperson confirmed the restructuring and Binny Bansal retaining charge of the logistics business.

Flipkart, which has committed $2.5 billion over the next two to three years to expand its logistics, is adding partners — firms that it has picked up stakes in as well as those backed by its common investors such as Accel and Tiger Global.

The consortium of logistics start-ups is being built through investments, both directly and those made by its investors.

So far, Flipkart has invested in two logistics start-ups, BlackBuck, an online freight booking platform, and QikPod, a product and service start-up founded by president of Nasscom product conclave Ravi Gururaj. It also has picked up a crucial stake in MapMyIndia, a homegrown mapping company. Tracxn, a data analytics firm that tracks start-ups, has invested in Parcelled and Opinio. Flipkart founders Sachin Bansal and Binny Bansal have personal stakes in Tracxn.

“The common theme that unifies BlackBuck and QikPod is tech-enabled logistics and you will increasingly see use of technology in logistics. I think it is probably indicative of some more investments that could happen in this space,” said Prashant Prakash, partner at Accel Partners, in a telephonic interview on December 29. Binny Bansal’s new role was announced on January 11. Accel is also an investor in BlackBuck and QikPod.

Logistics, or the lack of it, is the biggest hurdle e-commerce in India faces. By opening up its platform to third parties, Flipkart could fulfil the last-mile delivery needs of other players, giving it access to an abundance of customer data. “Our scale and technology in operations will allow us to open the services to all companies, both large and small,” Flipkart had said in an e-mail in December

Every firm that has come under the alliance functions in a different area within the larger logistics space and in some cases have carved out a niche for themselves in the market. While BlackBuck enables inter-city freight delivery, Delhivery is a provider of e-commerce logistics and Opinio is a hyperlocal player.

Another major part of the logistics empire will be Flipkart’s own internal logistics arm eKart. In September this year the company purchased eKart from WS Retail, a subsidiary it created in 2012 that functions as the largest seller on its online platform. Flipkart’s delivery backbone is made up of 17 warehouses spanning 1.5 million square feet, the largest of which is in Hyderabad.

Flipkart’s chief rival Snapdeal, too, is placing a big bet on logistics. The company has earmarked $300 million to strengthen its supply chain and logistics operations, and claims to have reduced delivery time by over 70 per cent in the past year. Snapdeal has made 10 acquisitions in the past year in the technology, supply chain and payments space. The company also holds an estimated 42 per cent stake in logistics firm Gojavas, which is Snapdeal’s largest supply chain and delivery partner.

While several bets are being placed on tech-based logistics platforms in the country, there is no clear winner in sight. “I don’t think any significant scale winners have emerged. These are early days in the logistics space. You definitely have a few potential companies that can become very big, but you will see a lot more investment,” added Prakash.