Flipkart sets 3-year deadline to make profits

Plans to invest $2.5 billion in logistics over five years

E-commerce firm Flipkart has, for the first time, indicated a timeline for turning profitable. Co-founder and chief operating officer Binny Bansal, who was in Hyderabad to inaugurate the company’s largest fully-automated fulfillment centre on Friday, said the firm was expected to turn profitable in three years. The e-tailer also announced mega investments of $2.5 billion (Rs 16,250 crore) in a pan-India fulfillment and logistics network over the next four to five years.

The company, which turned eight recently, has been running losses and has maintained that its focus is on growth, rather than targeting profits. Flipkart’s possible initial public offering (IPO) of equity also came up during a media interaction with Bansal, who has rarely made financial statements so far. Chief executive officer and co-founder Sachin Bansal (not related to Binny Bansal) has been the face of Flipkart.

“We are well capitalised now, and our IPO will be in the long range... may be in the next five years,” the chief operating officer said.

Elaborating the company’s strategy, Bansal said the plan was to build a network of between 80 and 100 fulfillment centres, including 50 in Tier-II and Tier-III cities, with an investment of $500 million over a period over four to five years. Also, it has earmarked $2 billion for logistics during the same time frame.

The start-up, which has invested $100 million over the past eight years, sells 50 million products, delivering 500,000 orders per day. It is estimated to be valued at about $15 billion.

The latest 220,000-sq ft fulfillment centre in Hyderabad is its 17th across the country.

The 220,000-sq ft centre, which holds a storage capacity of 589,000 cubic feet, would create more than 2,000 direct and close to 15,000 indirect employment opportunities within the area.

“One of the key features specific to the Hyderabad facility is the one-km-long conveyer belt that has been designed to reduce motion wastage by 75 percentage. This will become a benchmark that Flipkart plans to adopt across warehouses in high-density regions across India,” Bansal said. Stating that south India was one of the biggest markets, contributing 40 per cent to its overall sales, Bansal said the reason for setting up their largest fulfillment centre in Telangana was due to the ease of doing business and a 'clarity' in the tax structure.