FabFurnish

Rocket Internet-backed online furniture retailer FabFurnish has launched a shipping solutions provider called FabOne, reports PTI. The report mentions that FabFurnish will be investing $15 million over the next 6-9 months to expand FabOne.

FabFurnish co-founder & MD Mehul Aggarwal told the publication that the reasons for launching a logistics arm was to “cut down on delivery cost and to ensure a greater customer experience.” It’s worth noting that FabFurnish co-founder Vikram Chopra had told Medianama, earlier this year, that 30% of their sales comes from tier 2 & 3 cities and the number is only increasing. Since reach of third-party courier companies is still limited in these centres, the decision to launch an in-house logistics arm seems like the next best alternative.

Apparently, the company has already invested $5 million to set up warehouses in Gurgaon, Bengaluru, Mumbai and one other unnamed location. The company has also, apparently, initiated operations in 7 cities, including Delhi, Mumbai and Pune among others. They plan to expand operations to 25 other cities across the country over the next few months, which is expected to include Kolkata, Hyderabad and Chennai. Aggarwal also mentioned that FabOne will eventually be opened up to other e-tailers, but will take some time.

Interestingly, Rocket Internet-backed online fashion store Jabong had launched a third-party logistics service called JaVAS (Jabong Value Added Services) in December 2012. However, it was later sold to Gurgaon-based QuickDel Logistics in February last year and rebranded to Gojavas. Jabong is currently listed as a client of Gojavas.

Last month, e-commerce company Infibeam had launched a SaaS-based logistics services aggregation platform called ShipDroid. The platform allows e-commerce merchants to integrate with various courier service providers in India, while maintaining uniformity of entire logistics/fulfillment process across all courier partners. The site claims it can deliver goods to over 20,000 pincodes across 600 cities in India.

E-commerce logistics

All three major e-commerce marketplaces in India – Amazon, Flipkart and Snapdeal – have in-house logistics arms:

– Snapdeal had launched a fulfillment service for sellers listing their products on its platform called SafeShip, in June 2013.

– Amazon India launched its third-party logistics service in November 2013. Last year, it had announced plans of opening five new fulfillment centers at Delhi, Chennai, Jaipur, Ahmedabad and Tauru (outskirts of Gurgaon), besides the existing fulfillment centers in Mumbai and Bangalore.

– Flipkart launched its fulfillment service called Flipkart Advantage in September last year.

– Kartrocket, an e-commerce platform for SMEs and smaller retailers, also has an in-house shipping solution called Shiprocket which it had opened up as a stand alone service to all e-tailers in India, in December 2013.

Our Take

This is likely to give FabFurnish a slight edge over competitors like Urban Ladder and PepperFry, especially in the tier 2 & tier 3 centres where the reach of courier companies is still limited. However, FabFurnish should learn from Jabong’s experience that launching a logistics service is easier than operating it.