New Delhi: Logistics firm GoJavas, partially owned by online marketplace Snapdeal.com, has temporarily suspended operations, citing technical issues.
Snapdeal, run by Jasper Infotech Pvt. Ltd, has been in talks to acquire a 100% stake in GoJavas, two people close to the development said.
The logistics company has been in the market to raise external funds but the talks have not progressed, said one of the two people on condition of anonymity.
Snapdeal owns more than a 42% stake in the company, Mint reported on 2 October, citing documents with the Registrar of Companies. According to various media reports in the recent past, the talks have failed to make headway.
In an email response to Mint’s query, GoJavas confirmed operations have been suspended. “GoJavas is making changes to its operational model to be more flexible and to provide additional services and extra reach. However, we have encountered an IT (information technology) issue, which has hampered this rollout. We are working 24X7 to resolve this issue and will re-initiate load post thorough testing of our systems. All clients have been informed and are cooperating,” according to the email.
It, however, did not clarify what kind of operational changes were being referred to and how much time it will take to revive operations.
Snapdeal declined to comment.
Founded in 2013, GoJavas, which works with more than 450 companies, has stopped servicing its clients in the past 5-7 days. It counts prominent online retailers such as Fabfurnish (Bluerock eServices Pvt. Ltd), Lenskart (Lenskart Solutions Pvt. Ltd) and Healthkart (Bright Lifecare Pvt. Ltd) as its clients.
In April, GoJavas named the former executive of fast-moving consumer goods firm ITC Ltd, Amitabh Coomar, as its chief executive officer (CEO) after the departure of Vijay Ghadge, who was chief operating officer. Ghadge now runs Snapdeal’s in-house fulfilment unit Vulcan Express Pvt. Ltd as chief operating officer. Snapdeal had committed $200 million towards logistics and training sellers, Mint reported on 30 July 2015.
Alibaba-backed Snapdeal has invested more than Rs.237 crore in GoJavas since March 2015.
On 2 August, Snapdeal announced the starting of six new logistics hubs across the national capital region, Lucknow, Hyderabad and Kolkata, owned by Vulcan. The company has been aggressively trying to ramp up Vulcan, and Ghadge was brought in to spearhead the process, according to two people mentioned above.
Logistics and supply chain has always been the backbone of e-commerce firms as sound infrastructure helps reduce delivery cost and ensures faster delivery, which, in turn, helps win over customers. GoJavas primarily competes with Flipkart’s logistics firm eKart, Delhivery (SSN Logistics Pvt. Ltd), Ecom Express Pvt. Ltd and Dotzot, the e-commerce-focused arm of DTDC Express Ltd.
In February, in its effort to tap the rising opportunity in the logistics space, Flipkart also opened eKart to third-party e-commerce firms. eKart has firms such as Paytm (One97 Communications Pvt. Ltd) as its clients, among others.
Online retail sales could touch between $48 billion and $60 billion by 2020 from $4.47 billion in 2014, according to a report by financial services firm UBS Group AG in April last year.
GoJavas was also in the news last month after a pseudonymous Twitter account holder created a controversy by circulating allegations that Jabong co-founder and former CEO Praveen Sinha made personal gains from business dealings at the fashion website, charges he has denied.
Much of the investigation revolved around GoJavas, a company where Sinha continues to own a significant stake.