Online marketplace Paytm is piloting a service where goods shipped from its platform will be delivered by Ekart, the logistics arm of Flipkart, signalling collaboration between the leader and a fast-growing rival in the fiercely competitive e-tail sector.
Roping in a rival online marketplace is expected to boost prospects for Ekart, which is fashioning itself into an independent business while reducing dependence on a single customer — Flipkart. For Paytm, the move marks greater focus on reaching customers in smaller towns and cities which generate more than half of total orders.
Paytm piloting service to deliver goods via Ekart-the logistics arm of Flipkart”Ekart will be an interesting experiment for us,” said Vijay Shekhar Sharma, the Chief Executive Officer of Paytm. “Since we are a marketplace, we work with different vendors to enable our merchants reach a wider consumer base.”
The Alibaba-backed company, which is amongst the most recent entrants into the online retailing industry said it ships about 1 lakh orders every day.
Bengaluru-based Ekart, which has been on an aggressive growth spree since the elevation of Binny Bansal as the new chief executive officer of Flipkart, has also begun a pilot to deliver shipments for fashion portal Jabong.
“Ekart has the capability to transport over 5 lakh shipments from different sellers across India. We will be using the same capabilities to offer services to other companies,” said Amitesh Jha, a vice-president at Ekart. The company expects to win an equal volume of business from Flipkart and from third-party shipments by next year.
India’s top ecommerce companies including Flipkart, Amazon and Snapdeal have each set up in-house logistics companies, as they compete to deliver shipments quicker to customers.
A recent report by financial services firm India Infoline estimates that the volume of ecommerce orders will amount to 2,000 tonnes per day by fiscal 2020.
“Logistics is still broken in India and companies need to quickly build capabilities in ancillary areas and offer value-add services to customers in order to create a hook,” said Prahlad Tanwar, director for transport and logistics at KPMG.
For online retailers fighting for a share of a market expected to reach $36 billion in 2016-17 according to Goldman Sachs, delighting customers is an important tool.
“We are integrating Ekart with our network of logistics players to offer end-to-end experience for both consumers and sellers,” said Sudhanshu Gupta, head of business at Paytm.
The tie-ups with Paytm and Jabong are a part of Ekart’s strategy to offer warehousing services and end-to-end fulfilment services to sellers. The company expanded total warehouse space to 1.6 million square feet at the end of 2015 across 17 fulfilment centres, with plans to open eight more centres this year. It expanded its team by nearly half in 2015 and currently employs about 14,500 people.
“There will be increased focus on mid and small-tier ecommerce companies to service demand since they will not have the cash to set up capabilities unlike the top-funded players,” said KPMG’s Tanwar.
Source: The Economic Times
