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Flipkart partners with Adani Group to boost supply chain: What the deal means for India’s e-commerce sector

Walmart Inc’s e-commerce unit, Flipkart Online Services Pvt has inked a deal with Ahmedabad-based Adani Group which will see the former lease out one of the largest retail warehouses in the country (to be built by the latter) as the US-based e-commerce giant prepares to intensify the battle between Inc as well as India’s indigenous players, most notably Mukesh Ambani’s Reliance Industries.

The commercial partnership between Flipkart and Adani will, reportedly, create 2,500 direct jobs. As part of the agreement, Adani Logistics Ltd will construct a 5.34 lakh square-foot fulfilment centre (around the size of 11 football fields) at its upcoming logistics hub in Mumbai. The warehouse will be leased to Flipkart enabling it to cater to the rising demand for e-commerce in western India and to support market access to thousands of MSMEs and sellers in the region.

The state-of-the-art warehouse is expected to come into commission in the third quarter of 2022 and will, reportedly, have the capacity to store roughly 10 million units of inventory at any point, according to a joint statement released by the two companies. Flipkart will also develop its third data center at the AdaniConnecX facility in Chennai in order to leverage the latter’s leading technology product suite.

The latest announcement arrives only days after Inc provided a rare glimpse into the Covid-era growth of its Indian operations. The US-based giant noted that it had enabled exports of Indian-made goods worth roughly $3 billion, creating over a million jobs since it originally began operations in its largest overseas market around a decade ago. It added that $1 billion of that and 300,000 jobs came since January 2020, reflecting the massive transformation in Indians’ shopping behaviour that the pandemic has, for all intents and purposes, necessitated.

Following its exit from China nearly a decade ago, Inc has doubled down on the Indian market as it goes head-to-head against Walmart’s Flipkart. The Indian e-commerce market has been one of the few but biggest beneficiaries of the pandemic as containment measures introduced to curb the spread of the virus have led millions to turn to the convenience of online shopping. According to estimates by Morgan Stanley, India is expected to generate as much as $200 billion via e-commerce sales by 2026.

Also looking for a slice of that pie is Mukesh Ambani’s Reliance Industries. Ambani’s e-commerce platform has benefitted from the implementation of new foreign investment rules introduced in 2018 that prohibited Amazon and Flipkart from featuring exclusive products and owning inventory, presumably to restrict their ability to drive down prices and offer discounts. Experts have noted that Reliance’s low-cost procurement and network of brick-and-mortar stores puts it in a prime position to disrupt the online retail space.

But with the latest deal, it now appears that the Adani Group has skin in the game as well, as the three online retail giants battle it out to dominate the Indian e-commerce sector. Times Now News

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