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Zoran Simovic
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Snapdeal buys stake in GoJavas, earmarks $150-200 mn for logistics

Published on 12/3/2017
For additional information  Click Here

New Delhi: Snapdeal has picked up a minority stake in logistics firm GoJavas as it eyes ten fold growth in volumes in the next two-three years. Sources told Firstpost Snapdeal has invested Rs 150-200 crore in picking up this small stake but this was not confirmed by co-founder Rohit Bansal.

Snapdeal. Screen grab of webiste.

Snapdeal. Screen grab of webiste.

He merely said that Snapdeal is open to more such partnerships with other logistics companies. That logistics is assuming significance for Snapdeal is evident: it has earmarked $150-200 million in logistics next fiscal.

Bansal said the company is planning to offer 4-hour deliveries in the next few months across top 10 cities in India. So why acquire even a small stake in GoJavas when Snapdeal says it will never actually enter the logistics business itself and will not completely acquire any logistics company? This partnership with GoJavas could help Snapdeal do dedicated capacity buildup with at least one player to tackle exponential growth in volumes in the coming months. Bansal made it clear that the partnership and stake acquisition did not bar GoJavas from doing business with other e-commerce players; neither did it bar Snapdeal from using services of other logistics companies.

A story in Mint newspaper this morning points put that large e-commerce companies such as Flipkart, Myntra and Amazon have their own last-mile logistics units to wield better control over the delivery time and experience. However, Snapdeal has so far stayed away from putting in place its own in-house logistics and currently works with third-party delivery service providers such as Blue Dart, GoJavas, Ecom Express and many more.

Founded in 2013, GoJavas is an Indian supply chain solution provider that serves around 30,000 consumers per day in 85 cities. It currently has clients such as, Fabfurnish, Healthkart, Yepme and Lenskart.

Though he did not respond to a question on how many similar partnerships/minority stake acquisitions are on the table, sources indicated that Snapdeal may examine other logistics firms which offer differentiated services. For example, there are some firms with expertise in last mile deliveries, some others which specialise in heavy deliveries (like refrigerators).

As Firstpost said earlier, Snapdeal is eyeing a five fold increase in the value of goods sold through its platform to $9-10 billion by December this year. Though it is piling losses now, the etailer has said earlier that when it does turn the corner, it will be the "most profitable" e-commerce company in India. In an interview to Firstpost earlier, co-founder and CEO Kunal Bahl had likened Snapdeal's trajectory to that of the Chinese e-commerce giant Alibaba which became profitable only after 11 years. For now, the company is focused on getting a million sellers on its platform in the next three years from just a lakh at present. Apart from getting more small sellers to come to it, Snapdeal is also simultaneously expanding its tech prowess and growing through strategic acquisitions. It recently acquired, a luxury and fashion portal as it looks to scale up the fashion business to $2 billion in GMV by December.

Speaking today after the GoJavas partnership, co-founder Bansal said Snapdeal is looking to do 5-6 acquisitions this calendar year and areas of interest would be big data and mobile technology.

Speaking earlier Bahl had said Snapdeal has grown 600 percent in the last 12 months, with fashion, electronics and home categories largest contributors to this growth. He had also said 85 percent of all orders placed on Snapdeal are shipped within 24 hours.

Snapdeal covers 5,000 cities and towns across the country, including all pin codes in Andaman and Nicobar Islands, over 1,100 pin codes in northeastern states, almost all of Jammu and Kashmir (including Leh and Ladakh).

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