Myntra and Flipkart to share infrastructure, logistics

Flipkart and Myntra have started rolling out plans to leverage common infrastructure, especially logistics and warehousing. The 2 firms have started consolidating parts of their supply chain starting with warehouses, two people familiar with the move said.

“The technology stack will remain separate even in the future but it does not make sense to have two warehouses when you can do with one,” said a source who did not wish to be identified. Flipkart declined to comment.

Flipkart currently delivers over 8 million shipments a month and by 2017-18, the company is targeting ten times the shipments a month.

As it grows and eventually looks to become profitable, Flipkart will need to drastically improve the efficiency of its supply chain.

“In market place, as e-commerce organizations keep on boarding multiple vendors, there is massive scope for supply chain and logistics optimization, specifically on the first mile and last mile logistics,” said Alvis Lazarus, a Bengaluru-based supply chain and e-commerce expert.

As more vendors sell on Flipkart and the share of shipments done by third-party logistics companies goes up, the e-commerce company is likely to focus its own logistics and delivery resources on making returns cheaper and smoother.

More than 10% of products sold are returned for most e-commerce companies on an average. The chances of return are higher in the fashion category, which is the bulk of Myntra’s sales.

Flipkart and Myntra have started rolling out plans to leverage common infrastructure

Supply chain is one of the costliest functions at e-commerce firms after marketing. According to retail advisory Technopak, typical online retailers spend 6%-8% of their gross merchandise value on logistics. However, to improve customer satisfaction, Indian e-commerce players have been spending 7%-15% of sales on logistics.