17/03/2015 3:47 PM IST | Updated 15/07/2016 8:25 AM IST

Snapdeal To Invest Upto $200 mln To Boost Delivery Network, Says Report

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The website is displayed on a laptop computer in an arranged photograph in New Delhi, India, on Thursday, Aug. 21, 2014. India doesnt allow foreign-controlled companies to sell products online. Thats led web retailers such as the local Snapdeal to a different model than the one pioneered by Amazon: they operate online marketplaces and local traders sell goods in a $3 billion e-commerce market. Photographer: Kuni Takahashi/Bloomberg via Getty Images

E-commerce company will invest $150 million-$200 million to strengthen its delivery network in the next financial year.

The SoftBank backed company had invested in a minority stake in logistics company GoJavas, Rohit Bansal, co-founder of Snapdeal, said on Tuesday. He did not say how much the investment was worth.

GoJavas was founded two years ago, and had signed another online fashion retailer Jabong as its first client. It now delivers in over 105 cities, and shipped 5 million packages last year. Acquiring this company would allow Snapdeal to deliver in ten select cities in just four hours. This would be a crucial advantage over its competitors.

Getting logistics and deliveries in place is critical for e-commerce companies in India, where the traditional government-owned postal system can be slow and unreliable. Flipkart had was the first e-commerce company in the country to develop its in-house logistics and delivery team to make sure products were stocked adequately in its warehouses and reached customers in time. Today that team is 12,000-strong and handles about 85 percent of all goods sold on the portal.

Amazon India is also planning to scale up its logistics and delivery team. It is going to hire about 8,000 people for its logistics and delivery operations, which would make it the largest such team in the country, beating Flipkart's.

Having a reliable logistics network will also help e-commerce companies offer same day delivery to more cities. Most of their orders come outside India's major cities, where most of India's 300 million-strong urban middle class reside.

Snapdeal has previously said that it is looking to acquire 5-6 companies this year to buttress its business in an intensely competitive field.

(With inputs from Reuters)