Vulcan Express, which manages about half of Snapdeal’s deliveries and shipments, replaced Gojavas as the primary logistics partner when it was formed about three years ago. The company, currently operational in more than 100 cities, offers logistics and supply chain solutions for retail and consumer companies, which could help future group’s wider strategy of assimilating Future Group’s digital and brick and mortar retail businesses. Future Group, India’s largest retailer, is said to be in talks to buy online retail platform Snapdeal’s logistics arm Vulcan Express for about Rs 50 crore in an all-cash deal.
Snapdeal, the country’s third-largest retailer, began flaking noncore assets and services almost a year ago, including digital wallet lesser Freecharge, which it sold for Rs 385 crore to Axis Bank. India’s logistics industry, excluding rail freight and port handling, is currently evaluated to be worth about Rs 7.5 lakh crore, with organized companies accounting for 12% of the market and the remainder with small, local players.
In comparison, Vulcan Express provides logistics services, including warehousing, transportation, last-mile distribution and reverse logistics as well as quality control and restoration of goods, for Snapdeal, smaller retailers and high-value product sellers such as cosmetics firms. “The deal will also benefit Snapdeal for its 2.0 strategy of creating an asset-light model and focusing on the e-commerce business. Vulcan will continue to be one of the logistics partners for Snapdeal even under the new owner,” said one person.
A fortnight ago, Biyani-owned Future Supply Chain raised Rs 650 crore by listing on the stock exchanges. The decade-old company caters to clients across consumer, food and beverages, e-commerce and electronics and gets about 63% of its revenue from group entities. At present, Future Group’s technology incorporation, internally called Retail 3.0, is being directed by making several Easyday stores a marketplace, giving consumers access to the company’s entire inventory through the digital medium.
While 98% of the transaction in India takes place at physical stores, Future Group has been investing in technology, artificial intelligence and creating supporting set-up such as last-mile delivery for online sales. With 44 distribution centers covering 4 million square feet of space and 105 branches servicing 11,228 pin codes in the country, Future Supply Chain is already one of India’s largest third-party logistics and supply chain firms.