WS Retail is looking to separate its logistics arm Ekart into a wholly-owned subsidiary before Flipkart goes for an IPO in 2016.
WSR was set up by Flipkart’s founders in 2010, but they soon sold off their stake when they became a marketplace to comply with FDI norms, and it became a retailer on the online store. EKart , which was earlier a dedicated logistics partner for Flipkart, is handled by WSR and caters to other e-commerce companies as well.
“WS Retail is a seller and Ekart is a brand for logistics. Why it is becoming challenging is that states have separate rules for registration as a transportation agency or a courier company. But WSR is a not a transportation agency. So that’s where we are facing the problem,” a source familiar with the deal told ET in a report.
Ekart ships 85 percent of products ordered on Flipkart, and WS Retail has been pronounced as the topmost retailer on Flipkart in the above mentioned report and its on-going association with the etailer has been questioned by the media and the industry. While it was divested to comply with the FDI norms, the company still seems to be the preferred partner for retail and logistics for Flipkart.
The move to diverge Ekart into a separate entity could also lead to clearing up this image of Flipkart, and its associations with third-party Indian companies, before it goes public.
In 2013, online fashion retailer Jabong had spun off its logistics arm GoJavas into a separate entity, both the companies are up and running independently. This similar initiative by WS Retail is also aimed at the separation of the management and operations of the two businesses so that, to create stand alone retail and logistics companies. So what was once only Flipkart, is now three different companies with three different models.
Image Source: definitecommerce.com