Flipkart to set up India's biggest logistics park near Bengaluru

Homegrown e-commerce giant Flipkart is planning to set up an integrated logistics park on the outskirts of Bengaluru. This will be the largest and one-of-its-kind facility in the country. The facility, for which the company is in the process of acquiring 100 acres of land, will house multiple massive warehouses that will rival in size those set up by Amazon and Alibaba in the US and China, respectively.

The unit, which will help Flipkart consolidate all its warehouses in and around Bengaluru, will also act as the nerve centre or the logistics hub across the four southern states of Karnataka, Tamil Nadu, Kerala and Andhra Pradesh. The company says the unit will house 4.5 million square feet of warehousing space in the next few years. “This is going to be the largest investment from Flipkart’s side for the next five to 10 years. One is land acquisition and the other big investment is going to be the kind of facilities that we build here,” said Amitesh Jha, vice-president and head of Flipkart’s logistics arm, eKart. “The capex will be in hundreds of millions of dollars, but I will not be able to give you the exact investment figure.”

Flipkart says the integrated logistics park will not only help it deliver products to customers faster, it will also help reduce the cost of logistics by bringing together multiple players in the ecosystem.  The park, location of which will be finalised in the next few months, will have 1.5 million square feet of warehousing space by the middle of next year. 

By 2020, the company says the unit will employ 5,000 people directly, apart from creating indirect job opportunities for 15,000.

In comparison, the largest e-commerce warehouse in the country today is run by US online retail giant Amazon in Telangana, which spans 400,000 square feet.

A typical e-commerce warehouse or sortation centre in India today measures around 100,000 square feet, or about a tenth of the size of similar facilities that are present in the US and China.

Flipkart says the scale of the unit is indicative of its ambitions. Jha says that in the next 10 years, the estimated requirement for warehousing space, just to serve Bengaluru, could be 4.5 million square feet. 

When that happens, the logistics park will solely serve the city, with similar units serving other regions of the country.

“The idea was to acquire enough land to serve us for the next 10 to 15 years. We will keep on building fulfilment centres there in an integrated manner as we keep getting extra demand. This will also help develop the logistics ecosystem there, which will help us do things like get trucks on demand or hire additional manpower on the fly,” added Jha.

Apart from housing massive warehouses, the unit will also have equally large sortation centres and a transportation hub. Despite building the logistics park, Flipkart will continue to expand into more regions with small fulfilment centres. Today, the company has 21 centres spread across nine regions, but in the next 12-18 months, it is planning to move into as many as 25 regions across India.

Another area of investment for Flipkart will be in integrating technology into these warehouses and sortation centres. Jha says the company is already working on developing the technology for this, apart from working with warehousing solution providers and component markers to Indianise their products. “We just do not want to be a consumer, we want to be deeply involved in the technology. If you build a 1 million square foot box and do not have systems and processes to cater to it, it is not going to work,” added Jha.

Logistics is one of the most critical aspects in the e-commerce space and absorbs a major chunk of the investments in the sector globally. In an interview with Business Standard last year, Amit Agarwal, vice-president and country manager at Amazon India, had said that the US firm had diverted over half of its investments in the country to building its logistics capabilities. 

Today, the company has 41 fulfilment centres spread across 13 states, with a claimed storage capacity of 13 million cubic feet. Jeff Bezos, founder and chief executive officer of Amazon, has so far committed to investing $5 billion in the country.