Explained: The significance of the deal Flipkart, Adani group have signed

What are the main aspects of this deal?

The logistics unit of Adani Group, Adani Logistics Ltd, 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. Further, 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.

What does the deal mean for Flipkart?

Retail experts believe that Flipkart spending on a massive fulfilment centre means it is readying itself for an intensifying contest in the country’s e-commerce sector, expected to balloon up to $200 billion in size by 2026.

The Bengaluru-headquartered company will also develop a data centre in Chennai, which the firm said will allow it to address growing needs “with a significant focus on security and keeping data locally within India”.

What does the deal mean for Adani Group?

The deal means that the Adani Group now has a leg in the battle among US-based Amazon, Mukesh Ambani’s Reliance Industries and the Walmart-owned online retailer. “This broad-ranging partnership across our logistics and data centre businesses is a unique business model, and we see this as a great opportunity to serve Flipkart’s physical as well as digital infrastructure needs…We look forward to a long and fruitful partnership as we focus on learning from each other as well as leveraging our mutual strengths to prioritise consumers and development of India’s MSME ecosystem,” said Karan Adani, CEO of Adani Ports and Special Economic Zone.