Flipkart infuses Rs 1632 crore into its logistics arm ekart

To scale-up and expand its delivery infrastructure, homegrown e-tailer Flipkart has put in Rs 1632.81 crore ($257.3 million) into its logistics arm eKart, which is registered as InstaKart.

According to the Registrar of Companies (RoC) filing, Flipkart raised the sum in two tranches -- Rs 1,309.20 crore ($206.20 million) in November and 327.41 crore ($ 51.56 million) in October. The development was first reported by VCCircle.

eKart raised this sum by allocating equity shares at Rs 62.51 apiece to its Singapore-based group firm Klick2Shop Logistics International Pvt Ltd.  Ekart has raised $98 million funding from Klick2Shop. Klick2shop is the controlling entity of Instakart.

Queries sent to Flipkart did not elicit any response at the time of publishing this report.

Flipkart does not want to give any easy space to its rival Amazon India. The e-commerce firm has assigned Rs 3,000 crore (about $460 million) to its logistics arm Ekart for investments and acquisitions.

Ekart has around 600 delivery hubs in India. Flipkart delivers over 70 per cent of its products through Ekart. It claims to deliver 10 million shipments a month to 3800+ pin codes.

According to Satish Meena, senior forecast analyst at research firm Forrester Research, the latest investment will prove crucial in future as a differentiator when Flipkart launches its own loyalty programme, along the lines of Amazon Prime

This week, in an interview to ET, Flipkart chief executive Kalyan Krishnamurthy told The Economic Times that the company’s new focus metric would be increasing its monthly active users and this is expected to grow over two-fold in 2018.

Flipkart and Myntra have a 75-80 per cent market share in the online branded and unbranded, home, mobiles and appliances categories, which account for over 80% of e-commerce in India, he added.

Flipkart got $1.4 billion investment from eBay, Microsoft, and Tencent at a valuation of $11.6 billion in April 2017. The e-commerce major has been building on its private label in categories like electronics, furniture, and large appliances.

Whereas Amazon has also been significantly ramping up its investments and warehousing capability.

Amazon Transportation Services (ATS), the logistics arm of e-tailer Amazon India, received $20 million in November last year. In August, Amazon poured in Rs 400 crore into its Indian logistics arm to expand its business operations, just before Amazon India’s annual festive season. At present, it has fulfillment centres to 41 in 13 states across India with a combined storage space of close to 13 million cubic feet.

Earlier during festival season sales, Flipkart and Amazon made major claims about their logistics capabilities. While Ekart claimed to handle over two million packages a day at its main Bengaluru hub during the Big Billion Days (BBD), Amazon on average delivered 23 packages per second to its customers across India.

According to a report by research and advisory firm RedSeer Consulting, Flipkart emerged as the leader after the just-concluded festival season sales with a market share of 58 percent versus Amazon’s 26 per cent.