Flipkart has bought back its logistics arm from WS Retail Services Pvt. Ltd, the largest seller on its platform to simplify its business structure ahead of an initial public offering that the company is looking forward to, a couple of years hence. The value of the deal has not been disclosed yet.
The acquisition has been made by Instakart Services which is a new subsidiary of Flipkart. In July, Instakart had raised Rs.127 crore from Klick2shop Logistics Services International Pte, a company registered in Singapore. Klick2shop was incorporated in February and is registered under the same address as Flipkart Ltd, the group’s holding company, in Singapore.
A Flipkart spokesperson stated, “We, as a policy, do not comment on specific transactions. Moreover, Flipkart follows the highest standards of corporate governance for all its business activities. We ensure that every transaction we undertake, adheres to all applicable procedural, legal and regulatory norms, including fair value norms.”
Flipkart shares an interesting history with WS Retail and Ekart. WS Retail was founded in 2010 by the Founders of Flipkart. With the FDI hammer coming down, Flipkart changed its model and became a marketplace, selling off WS Retail and eKart to a third party. Moving further, eKart continued to serve as a logistics arm for WSR and other eCommerce companies too.
In January this year, there were rumours suggesting Ekart’s imminent split from WS Retail to become an independent company, which however, never translated into a reality.
Flipkart, which has raised more than $3 billion in funding is now valued at $15 billion and is targeting gross sales of more than $10 billion this year.
Talking about logistics and supply chain in the Indian eCommerce industry, Snapdeal in March had made an announcement stating that it will invest around Rs 1,200 crore to beef up its logistics network. Further, the company had declared that it will be acquiring at least five to six companies in mobile technology, big data and supply chain space this year. Moreover, the Jasper Infotech-owned online marketplace will also launch a four-hour delivery service in 10 cities soon, to beat its competitors.
Further, Snapdeal Co-founder Rohit Bansal holds a minority stake in logistics firm GoJavas. Commenting on the subject, he stated, “We have formed a strategic partnership with GoJavas and it will continue to function as an independent company. We will co-invest in building capacity for the future.” Notably, GoJavas used to serve as the dedicated logistics partner of Jabong. However, their partnership ended eventually.
Similarly, to bolster its delivery arm, native mCommerce biggie Paytm has just made an official commitment of investing around $10-15 million in logistics analytics startup LogiNext.