The purpose of this allocation is to meet its financial requirements towards investments, new acquisitions and inter-corporate loans

Flipkart infuses 460 million into logistics arm Ekart for investment deals Image source: PTI
Atom Ecommerce Wednesday, October 11, 2017 - 09:10

Flipkart is getting aggressive with its logistics arm Ekart amidst a busy festive season across the country. Apart from this, the ecommerce company is getting back into the grocery operations where a stronger logistics support is essential to offer satisfactory services to the customers.

Keeping these in view, the company has transferred a sizeable Rs. 3, 000 crore ($460 million) to Ekart and the purpose of this allocation is to meet its financial requirements towards investments, new acquisitions and also inter-corporate loans if any. These details have actually been obtained through the filings with the regulators, as reported by Inc42.

The company has explained that Ekart may be utilizing these funds towards making strategic investments and to acquire companies to expand and beef up its logistics services in the near future. Besides, Flipkart is under tremendous pressure from rival Amazon in areas like local fulfilment centers and to make service coverage to Tier II and Tier III cities in India more efficient and effective. So, these moves by Flipkart has to be seen in that perspective. Flipkart itself has raised the level of its investment fund to Rs. 8, 000 crore.

Flipkart had a meteoric rise in the ecommerce space and has been successful in attracting investments also to the tune of $4 billion in less than a year and the list of investors in its business is quite impressive to peruse. These include eBay, Microsoft, Tencent and SoftBank. In terms of its actual performance it is in the process of constantly reinventing itself in the dynamic online market place and helping it is Microsoft with the latest in technologies in the AI and ML (machine learning) areas.

In the back-end activities also, the payment gateway PhonePe is being strengthened and popularized to gain maximum traction from the buying public. In the logistics space, Ekart is expected to play its part to the core.

As mentioned, in each of these areas, Amazon, with its international presence and deep pockets is pushing Flipkart to keep pushing the bar higher and so far, it has stood up to it. The competition can only get tougher by the day.

Some fine-tuning in the business strategy is also being attempted. This involves focusing on customer satisfaction through better payment options and faster and more convenient delivery mechanisms, rather than just playing the discount card all the time.    

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