India’s e-commerce revolution had been started off by brash young startups, but large conglomerates are now coming on board.
The Adani Group has announced a strategic and commercial partnership with Flipkart. As part of this partnership, Adani Logistics Limited will construct 534,000 sq. ft. fulfilment centre in its upcoming logistics hub in Mumbai that will be leased to Flipkart. In addition, Flipkart will set up its third data centre at Adani Group’s Adaniconnex Private Limited Chennai based facility. Adani Group Chairman Gautam Adani said that the partnership would create thousands of jobs.
The fulfilment centre is expected to be operational in Q3 2022, and will have the capacity to house 10 million units of sellers’ inventory at any point. The companies say that the center will address the growing demand for e-commerce in Western India and support market access of several thousands of sellers and MSMEs in the region.
“The Adani Group is unmatched in the way it has gone about building infrastructure across India,” said Flipkart Group CEO Kalyan Krishnamurthy. “What it brought to us was a unique combination of logistics, real estate, green energy, and data centre infrastructure capabilities. We are delighted to initiate our association with the Adani Group to strengthen our supply chain and technology infrastructure,” he added.
It’s an interesting play. The Adani Group has a logistics arm in Adani Logistics, but also runs ports and airports, which play a role in how e-commerce goods are ferried across the country. The partnership could have synergies — Flipkart gets to work with a seasoned logistics company that can also help it maneuver local regulatory issues, and Adani, on the other hand, could get a toehold in India’s e-commerce pie.
Large Indian conglomerates have all been looking to make their plays in the burgeoning e-commerce space. Some, like Reliance, have gone on their own by building JioMart from scratch; others like the Tata Group have acquired startups like BigBasket to create their own e-commerce plays. The Birla Group, for its part, has dabbled in e-commerce with abof.com, and has let Flipkart acquire a stake in Aditya Birla Fashions, its fashion arm which operates brands like Allen Solly, Peter England and Louis Philippe. The Adani Group was strongest in logistics, so it appears to have taken a stake in the e-commerce pie through this route. It’s still early days to determine how these investments will play out, but it’s clear that large Indian corporate houses, which were initially seen to be dismissive of the sector, now seem very keen to board India’s e-commerce train.