Flipkart in talks to invest in firms to boost supply chain

Bengaluru/New Delhi: Online marketplace Flipkart Ltd is in talks to invest in four firms including maps provider MapmyIndia as the company seeks to improve its supply chain efficiency, three people familiar with the matter said.

Flipkart is also looking for a head of corporate development after mergers and acquisitions (M&A) head Nishant Verman moved to a new role. Verman is now chief of staff for Mukesh Bansal, the company’s commerce platform head, the people cited above said, speaking on condition of anonymity.

The Bengaluru-based company is close to buying a minority stake in MapmyIndia (promoted by CE Info Systems Pvt. Ltd), the people cited above said. MapmyIndia will help Flipkart with mapping data and vehicle tracking services as the e-commerce firm goes deeper into the hinterland to deliver smartphones, apparel and other products to customers. Flipkart is betting that MapmyIndia’s products will also help its delivery team in route optimization: picking the most suitable routes and cutting the time taken to deliver products to multiple customers on a given day, the people above said. With accurate mapping and pin code data, the company’s delivery executives can potentially deliver more products in the same time, compared with what they do currently.

Flipkart also plans to use some of MapmyIndia’s products to build its own solutions for improving performance of its supply chain, the people said.

The company is expected to spend hundreds of millions of dollars on building warehouses and expanding its delivery force over the next two-three years. Its supply chain business is run by co-founder and chief operating officer Binny Bansal.

Digital maps are becoming an increasingly important part of e-commerce. And with companies eager to reduce their reliance on Google Inc.’s product Google Maps, alternative solutions are much sought-after. Last week, cab-hailing service Ola struck a licensing deal with MapmyIndia to use its digital maps and location data to build new solutions. Through the partnership, Ola will get access to mapping data from MapmyIndia, which has the intellectual property rights to the country’s digital map data.

Flipkart, which has raised $2.6 billion over the past 18 months, may invest in two other supply chain-related start-ups, the people cited above said. The company is also in talks to invest in a mobile gaming start-up, they said.

Spokespersons for Flipkart and MaymyIndia declined to comment.

The e-commerce market leader has been actively investing in start-ups over the past year. If the four mooted investments go through before January, Flipkart will have invested in more than 10 companies this year. The deals include its purchase of advertising technology company AdIQuity Technologies Pvt. Ltd, mobile marketing firm Appiterate (promoted by DSYN Technologies Pvt. Ltd) and digital payments service providers FX Mart Pvt. Ltd and Ngpay, apart from financial investments.

After spending more than $330 million on online fashion retailer Myntra in May 2014, Flipkart has avoided large deals. Most of the company’s investments and deals this year were small in size, estimated at anywhere between $1 million and $25 million.

Some of these acquisitions were made to improve Flipkart’s technology and add new products (such as ads); others are simply financial investments that Flipkart hopes will increase manifold in value over time.

The company hired Verman, a former investment professional with venture capital firm Canaan Partners, in July 2014 to build its M&A team. Under Verman, Flipkart was the most prolific shopper among e-commerce firms.

India’s second largest e-commerce, Snapdeal (Jasper Infotech Pvt. Ltd) has also set up an M&A team, following in the footsteps of Flipkart. Ola (ANI Technologies Pvt. Ltd) last month hired former InMobi executive Nimish Joshi to head its M&A team.

However, it’s unclear yet whether the M&A strategies of these firms will work.

Some of Flipkart’s acquisitions such as Ngpay are yet to come out with new products and services. Others such as AdIQuity and Appiterate have helped the company fulfil important business and operational needs.