Future Group in talks to buy Snapdeal’s logistics arm

India’s largest retailer, Future Group, is in talks to buy online retail platform Snapdeal’s logistics arm Vulcan Express for about Rs 50 crore in an all-cash deal. 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 Kishore Biyani’s wider strategy of integrating Future Group’s digital and brick-and mortar retail businesses.

Biyani had 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, ecommerce and electronics and gets about 63 per cent of its revenue from group entities. At present, Future Group’s technology integration, internally called Retail 3.0, is being piloted by making several Easyday stores a marketplace, giving consumers access to the company’s entire inventory through the digital medium.

Future Group has been investing in technology, artificial intelligence and creating supporting infrastructure such as last-mile delivery for online sales. On the other hand Vulcan Express provides logistics services, including warehousing, transportation, last-mile distribution and reverse logistics as well as quality control and refurbishment of goods, for Snapdeal, smaller retailers and high-value product sellers such as cosmetics firms.

Vulcan will continue to be one of the logistics partners for Snapdeal even under the new owner ans the deal will also benefit Snapdeal for its 2.0 strategy of creating an asset-light model and focussing on the ecommerce business.

However, a shift is happening towards organised sector and policy enablers like implementation of GST will further boost the process with change in supply chain towards larger warehouses and longer lead distances, making it difficult for small players to manage.