Importance of Flipkart-Adani data center deal

Walmart-owned online retailer Flipkart and Adani Group announced a deal to build warehouse in India, in addition to developing a data centre.
Flipkart India e-commerce
Adani Logistics will construct a fulfilment centre, or a retail warehouse, with an area of 5.34 lakh sqft in its upcoming logistics hub in Mumbai, which will be leased to Flipkart.

The warehouse, which is expected to be operational by 2022, will have the capacity to house 10 million units of sellers’ inventory at any point.

Flipkart will develop its third data centre at the AdaniConnecX facility in Chennai. AdaniConnecX is a joint-venture data centre company between Adani Enterprises and US-based EdgeConnecX.

The Bengaluru-headquartered company will also develop a data centre in Chennai.

Key takeaways

Frost & Sullivan said the e-commerce market is heating up in India as the country is one of the biggest consumer markets globally, ranked behind America and China.

Indian e-commerce logistics market is flourishing due to an increase in internet penetration, rise in smartphone adoption, favorable demographics, and surge in acceptability of online payment.

Supportive government initiatives to boost infrastructure development and GST implementation have improved e-commerce across the country. COVID-19 has also fuelled the growth of the e-commerce logistics sector, Bijay Oram, Director, Supply Chain & Logistics Practice, Frost & Sullivan, said.

E-commerce players are seeking alternative warehousing locations (fulfillment centers) to help the business continuity, along with mitigating delivery delays, which the partnership will help extenuating. In this context, a growing number of companies are opting for a collaborative approach to overcome challenges associated with e-commerce fulfillment and last-mile delivery space.

Repercussions of the collaboration

It is in line with the idea of self-reliant India built around three fundamentals – local manufacturing, local markets, and local supply chains. The construction of a fulfillment center to support MSMEs and sellers will sequentially develop the manufacturing and supply chain segments.

The need for data center infrastructure within India is necessitated by the data localization in line with the Data Protection Act, for the protection of the digital sovereignty of the country in an increasingly connected world.

A wide variety of goods will be offered to the customers at competitive pricing with mitigating delivery delays, thus boosting e-commerce sales.

With the increasing demand for e-commerce, the demand for an effective supply chain and related products and services will also increase, such as Automated Storage and Retrieval System (ASRS), route aggregator, supplier management, etc.

With this partnership with Adani, Flipkart will strengthen its supply chain infrastructure in the country and aims to fend off the stiff competition from other MNCs, partnerships, and collaboration. All eyes will be on the volume of trade that will take place from the newly constructed fulfillment center when it becomes operational in the third quarter of 2022.