India’s largest ecommerce upstart Flipkart is finally talking about profitability. The company has also announced an investment close to $2.5 billion in building a technology-backed logistic network in the country.
An additional $500M will be spent to increase the number of its fulfilment centres from present 17 to 80-100 in the next 5-6 years. More than half of these will be in Tier-2 and Tier-3 cities. This was revealed by Flipkart COO Binny Bansal who was speaking at the launch event of the fulfilment centre in Telangana.
The whole fulfilment centre network will be built out to cover the length and breadth of the country,
said Bansal in an interview with ET.
He added that the logistics network is the biggest differentiator and presents strong competitive advantages and so it would be the “biggest investment area” for the company. Bansal also said that the company is aiming to become profitable in 2-3 years and would go for an IPO in about 5 years.
Flipkart has 17 fulfilment centres in the country of which the latest one launched in Telangana is the biggest warehouse of the company and is the first automated fulfilment centre of Flipkart. The centre is spread across an area of 2.2 lakh square feet and has a storage capacity of 5.89 lakh cubic feet.
It is expected to process 120,000 units a day with the help of its modern technology consisting of automated sorters on a 1-km-long conveyor belt. These sorters can separate shipments based on pin codes and can reportedly process 6,000 shipments an hour. The company has so far spent $100 million in the 17 fulfilment centres so far.
Warehouses or fulfilment centres have become a crucial part of the supply-chain of all e-commerce firms, mainly Amazon and Snapdeal in addition to Flipkart who are on their toes to grab the maximum market share through fast delivery and efficient systems.
In comparison to 17 fulfilment centres of Flipkart, Snapdeal has 63 such centres and Amazon India has 21 fulfilment centres so far. Snapdeal has already announced to invest about $150-200 million (about Rs 940-1,250 crore) in the ongoing fiscal to expand its delivery operations and recently also acquired a
minority stake in logistics firm GoJavas.