Walmart has started consolidating logistics and supply chain capabilities in Flipkart and Myntra. According to two Entrackr sources, Myntra Logistics, the fashion website’s logistics arm, will now be rolled up under Amitesh Jha who heads Ekart — Flipkart’s logistics vertical. This will help the company trim its expenses by 10s of millions, added one of the people cited above.
This comes as companies across the world are looking at different ways to cut costs and extend their runway in the backdrop of the pandemic. This holds good especially for e-commerce companies that had their non-essential goods business to a grinding halt until recently.
“Myntra Logistics and Ekart already operate under the same legal entity – Instakart Services but with the new change there will be common infrastructure and capacity planning for future,” said one of the sources on condition of anonymity, adding that Flipkart made the announcement to its employees on Monday. “Since their [Flipkart and Myntra] demand peaks are not at the same time, there could be synergies.”
Logistics used to be a major pain point which led to e-commerce companies building their in-house delivery fleet and a network of warehouses during the 2011-14 period. Myntra also raised and scaled its own last-mile and backend supply chain. And until now, Myntra Logistics had continued to function the same way even after its acquisition by Flipkart and Walmart.
“As part of this move, the first target will be common capacity, inventory and infrastructure planning,” added the second person cited above, requesting anonymity.
Entrackr has sent queries to Myntra seeking a comment for this story. We will update as and when they respond.
While there is no public data available for Myntra’s own logistics network, sources say that it has about 500 hubs across the country which roughly translate into 2,500-3,000 workforce. The move will eventually help Flipkart have an efficient logistics unit.
Covid-19 pandemic has crippled the business of logistics companies as e-commerce saw demand plummet. Experts also say that it is expected to take months before these companies peak their volume.
“It’s a perfect time to consolidate logistics capabilities operationally and bring it under Jha who has been looking at Ekart in various roles since 2015,” said the second source.
Ekart is one of the largest e-commerce only logistics companies in India. According to Fintrackr, Ekart had recorded a 78% hike in revenue to Rs 4,422.2 crore in FY19 from Rs 2,488.7 crore in FY18. It also reduced losses to Rs 294 crore at the end of FY19 as compared to Rs 500 crore in the previous fiscal.