Flipkart to invest $2.5 bn in logistics, warehouses

Hyderabad: India's biggest e-commerce company Flipkart plans to invest $2.5 billion in logistics and fulfilment centres across the country over the next four to five years, co-founder and COO Binny Bansal said on Friday.

The company, which opened its largest fulfilment centre here, has long-term plan of investing $2 billion in logistics and $500 million for setting up 80 to 100 warehouses across the country.

Bansal told reporters that they will explore raising funds from public and private markets in addition from their own accruals. The expansion is expected to help the company achieve its goal to reach all regions and deliver the shipment to any customer in the country in two days.

The company has plans to launch an IPO in two to five years. "We have to take lot of factors in to account before launching it," he said.

Launched in 2007, Flipkart is still not profitable but Bansal is confident of the company reaching that zone in 2 to 3 years.

Telangana Finance Minister E. Rajender inaugurated Flipkart's largest fulfilment centre in the country at Gundla Pochampally on the city outskirts in the presence of Bansal.

Spread over 2.2 lakh square feet and with a storage capacity of 5.89 lakh cubic feet, this is Flipkart's 17th warehouse in the country.

The automated state-of-the-art fulfilment centre is expected to ship out 1.2 lakh items every day.

Bansal said the warehouse was designed to provide easy access to e-commerce services for sellers, while providing faster and seamless services to customers.

"It's a strategic location for us. It will help us reach the customer in this region in one day," he said. South India is the biggest market for the company accounting for 40 percent of its business.

Equipped with a one-km-long conveyer belt, which is expected to reduce motion wastage by 75 percent, the centre has automated sorters to separate shipments based on pin codes. It can sort 6,000 shipments in an hour.

Bansal said this centre would be a benchmark for the future facilities of the company. Out of 80 to 100 fulfilment centres planned, more than 50 percent will come up in tier II and tier III cities. Flipkart, which had a billion dollar funding last year, invested $100 million in setting up warehouses over last eight years.

He said the company choose Telangana for setting up the largest warehouse because of the ease of doing business and clarity in taxation rules.

The fulfilment centre will create direct and indirect employment for 17,000 people and benefit sellers in the region.

Offering 50 million products on its platform, Flipkart has 45 million registered users clocking over 10 million daily visits rpt visits. The company, which has 33,000 employees, delivers 10 million shipments every month.