Flipkart to open distribution hub in Kolkata as it reworks logistics strategy

By

Isabelle Crossley

Published
Mar 21, 2018

Shortly after announcing plans to open a large scale distribution hub near Bengaluru, Flipkart have announced that it will also open a similar hub near Kolkata as the e-commerce giant seeks to rework its logistics strategy.

The Bengaluru distribution hub will be spread over 100 acres and cater to the south and the Kolkata hub will be spread across 80 and will serve the east and northeast regions of India. As with the Bengaluru hub, it is estimated that the Kolkata project, which will comprise both order fulfilment and sorting facilities, will require an investment of 600 crore rupees (approximately 90 million US dollars). Flipkart may then go on to open similar large scale hubs in other areas as they are designed to cut down on logistics costs which is a major fund drain for e-commerce companies.

Flipkart’s Vice President, Amitesh Jha, told the Economic Times: “Logistics is the highest cost component for ecommerce. This is the first time we are investing on gigantic warehouses since availability of space for large warehouses is a problem. The goods and services tax [GST] has also made this possible. It will not only lead to cost efficiency, reduce delivery time by half but will also help us in ensuring our leadership in the Indian ecommerce market.”

As Flipkart and Amazon battle for dominance in the Indian e-commerce market, monitoring and addressing logistics costs appears to be the way to get ahead. As Jha estimates that 20 percent of logistics costs can be cut by creating large scale distribution centres, Flipkart’s next investment could prove lucrative.