The changing face of logistics in Indian ecommerce space

“The capability of logistics providers in India is at best 40 % upto the global standards. Unlike India, US and Western Europe saw a mail order revolution for 30 years before ecommerce came into being,”

Abhijeet Kumar, is a happy shopper and is all praises for e-tailers these days. His new found happiness has to do with the speed at which the stuff he buys online gets home. “Sometimes it takes only 6- 8 hours to get home,” says Kumar. While the 27 years old year old shopper knows very little about what happening behind the scenes, e-tailers, with a little help from fulfillment services companies, have been hard at work to fix their rear end i.e. the delivery infrastructure.

Changing for the better

Indian online retail industry has been scaling up and improving their product delivery, return pick-ups and shipment of wrong products to the consumers over the past two years. Helping them fix their backend, are fulfillment services companies. The landscape of the logistics and last mile fulfillment business for online retail has taken a leap forward from the traditional Courier and India Post model, to a combination of self fulfillment and Aggregated Shipping.

Multiple partners for more satisfaction

To overcome logistical issues, retailers and brands selling online have started working with multiple service providers, according to a report by Forrester. The report, titled “Trends in Indian ecommerce market” released earlier this month says that serving all parts of the country effectively can be quite daunting for etailers and hence they work with multiple partners. Following the lead from Flipkart, ecommerce players as well as start ups are realizing the need to reduce logistics spend and at the same time increase customer delight. However, the increase in volumes of etail shipments has made all logistics companies sit up and take notice of this opportunity.

logistics_ecomm_indiaEnter startups

Large logistics companies such as Bluedart, FedEx, Gati etc have launched dedicated services for online retailers. However, debut and rise of ecommerce focused logistic companies such as Chhotu, Mudita, unicommerce and Delhivery seem to be promising and can be the real game changer.

These companies offer solutions that address the various pain-points pertaining to supply chain of ecommerce companies, which traditional and big supply chain & logistic providers so far failed to do. Issues like last mile delivery, third party and transit warehousing, reverse logistics, offline payment collection have improved. However, Aadhar Aggarwal, co-founder, points out that big and traditional logistics companies lack alignment with ecommerce. “For them ecommerce is a small side business whereas for us it is our bread and butter. This reflects in our processes, culture and technology,” says Aggarwal. Entry of ecommerce specific logistics companies have addressed major pain-points of online retailers, for example cash remittance cycle has come down drastically, delivery time lines have improved, and return rate pertaining to COD has been curtailed significantly.

Delhivery, another startup focusing on ecommerce dedicated logistics and backend solutions offers multiple supply chain solutions. Besides last mile delivery it encompasses solutions such as third party and transit warehousing, vendor to warehouse and vendor to consumer shipping including customized logistics solutions. Noida based Unicommerce has recently launched its flagship product Uniware that offers real-time management of order fulfillment processes for ecommerce companies. With Uniware, etailers can manage end to end processes like procurement, goods receipt, quality assurances, pick and pack, invoicing, shipping, comprehensive return/replacements handling and inventory. To maintain exact and complete information of products in warehouse, Uniware assigns unique serial number (barcode) to every unit that enables etailers to track various details such as vendor, purchase date, product expiry and unit specification.

Mudita, a New Delhi based air cargo company has focused on the inter-city freight needs of online retailers, and offers  flexible support to etailers. Mudita works as aggregator of freight for e-commerce and it offers reduced transit time for online retailers, without increasing costs for them. With multiple collections and connections as part of Mudita’s service offering, it focuses on back end support which ensures that order fulfillment time lines are reduced to the lowest possible.

The future?

Throwing light on future outlook of ecommerce logistics, Amit Gulati, Director, Mudita said

“Over a short period, the challenges of Logistics which are amongst the major obstacles and pain areas for ecommerce companies will be overcome and an ecommerce focused Logistics environment will evolve, which allows great visibility and supply chain controls, while reducing the overall costs of operation”.

Dealing with scale

Ecommerce specific logistics companies are good solution when an online retailer has little volume. However, when etailers attains considerable traction and it has to scale further, these companies may not be able to handle bigger scale. Speaking about the limitation of ecommerce dedicated logistics companies, Sandeep Aggarwal, Founder & CEO, mentions

“These companies are good solution when you have small or limited volume but in my view, these companies will have problem because they do all the stone breaking work for a small etailer and when he has scale, he is ready to move out from these providers”.

Comparing the present standard of logistical infrastructure with matured markets of US and Western Europe, Aggarwal added “The capability of logistics providers in India is at best 40 % upto the global standards. Unlike India, US and Western Europe saw a mail order revolution for 30 years before ecommerce came into being,” he said.

“In India, before ecommerce, all the courier guys knew was either to move bulk shipment from one location to another or a document delivery for offices. The logistics guys have to go long way as their incapability serve as a hurdle for ecommerce ramp-up,” he added.

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