Flipkart’s Logistics Arm Ekart To Consolidate Operations; Shuts Down C2C, Hyperlocal Services

Ecommerce giant Flipkart is reportedly consolidating the offerings of its logistics arm – Ekart. As per an ET report, Flipkart has suspended Ekart’s customer-to-customer (C2C) courier operations. In addition to that, it has also ceased its hyperlocal delivery services in Bengaluru that were launched in November 2016.

As per an official statement, with this move Flipkart aims to focus on its core business model.

Commenting on the development, an official spokesperson from Flipkart told Inc42, “Beginning Feb, 5, it no longer operates its customer-to-customer courier service started in May 2016, that gave people the option of having documents and parcels packed by Ekart’s delivery boys and shipped to end-addresses.”

Flipkart bought back eKart from WS Retail in September 2015. The acquisition was made through a new entity called Instakart Services Pvt. Ltd. Following that, in February 2016, it infused $98.4 Mn (INR 666 Cr) in Ekart through a Singapore-based group firm.

“The move would help the company bring greater precision to the commerce service, a critical requirement as sales expand at Flipkart. However, Ekart would continue to offer warehousing solutions and end-to-end logistics and supply chain capabilities for its other clients,” it added.

Flipkart’s grocery delivery platform, Nearby shut down its operations in February 2016, and an ‘inadequate business model’ was the reason cited for the same. Ekart will continue to offer its third-party logistics services to Paytm and ShopClues, the report added.

In January 2017, US-based mutual fund investor T. Rowe Price reduced Flipkart’s valuation by another 4%, to about $9.9 Bn. This markdown came after Morgan Stanley slashed the value of its Flipkart shares by 38.2%. This markdown, in November 2016, pegged its valuation at $5.54 Bn. Following that, Fidelity managed mutual fund slashed its valuation by 36.1% in January this year. The company is now currently valued at $5.56 Bn.

Flipkart entered 2017 with a major reshuffle in its organisation structure. Co-founder Binny Bansal stepped down from the position of company CEO. Kalyan Krishnamurthy, who was heading the Category Design Organisation, became the new CEO of Flipkart.

At the same time, the company also announced the formation of a new Flipkart Group Organisation, which will now be headed by Binny. The organisation aims to create a future value through a portfolio of new, high growth businesses, manage capital allocation across group companies, and ensure each business has a strong CEO in place. Soon after the changes in management were announced, three of the top level executives reportedly resigned from the company.