Increasing internet penetration, growing acceptability of online money transfer and e-wallets, favorable demographics and the ease of online shopping have paved the way to e-commerce in the country. E-commerce sites are leaving no stones unturned to gain customer loyalty and to change their shopping behavior. Heavy discounts, cash on delivery, etc have proved to be the winners in the Indian market.
According to Assocham, “India’s e-commerce market was worth USD 3.8 billion in 2009; it went up to USD 17 billion and to USD 23 billion in 2015 and is expected to touch USD 38 billion mark by 2016.”
This gives a fair estimate of the huge transactions that take place while operating an e-commerce company. There is no doubt that it has become the most competitive model in this era of startup and it is logistics which distinguish one player from the other. It is not only the time in which the delivery is done that matters but also the effectiveness. Moreover, there are returns quite often which are again a mammoth task to handle. E-commerce startups are trying their best to maintain a record of integrated tracking and real-time updates between the merchants and the customers both in the forward process and the return process. Improved communication, transparency in the supply chain, improved customer satisfaction, cost reduction, improved efficiency and on-time delivery are the six major fields which e-commerce industry should pay attention to.
According to the ‘Logistics Market in India 2015-2020’, the country’s logistic industry is worth $300 billion. It is India’s fifth most thriving industry in terms of growth and volume.
Role of IT in logistics
E-commerce companies can regulate the flow of paperless documents online with the power of technology. Everything can be automated starting from data exchange to bulletin boards. The use of electronic commerce in logistics includes emails, shared databases and magnetic/optical data capture, electronic fund transfers etc. Also, Enterprise Resource Planning (ERP) tools are at the core of any logistics company to ease the process of pickups and delivery. This helps to reduce the manual tasks associated with financial processing, inventory and customer order information.
GPS is also important to track the activities during the whole delivery process on a real time basis. It can help to track the distance covered by the delivery boys and also the time in which it is covered. Most importantly, it helps to track if there has been some unauthorized use of vehicles or other resources or not hence allowing to save fuel as well.
Internet of Things is sure to become the game changer in the field of logistics and it will be done by in-transit visibility. It includes cloud-based GPS and Radio Frequency Identification technologies which provide all the tracking information at one go by automating the process of shipping. They can schedule the time of delivery and also control other features like temperature. Context-aware intelligence is again the next big thing which can provide data about a traffic jam even before the trip starts which is undoubtedly better than getting delayed due to the jam. This can save fuel costs effectually.
GIS offers the logistics company with a valuable risk management tool. With this technology, all the information can be depicted visually. It allows to view the complete company profile starting from delivery boys, office and warehouse location, customer location, orders, tracking, etc. This can even help to map and present various types of risks that can occur during the process.
Other technologies like monitor inventory can help in managing the stock of the warehouses. Embedded sensors can even help to know the behavior of customers and the way they use their products.
Advantages of having 3rd party logistics
The logistics supply chain often becomes a cumbersome process especially if it’s in-house. This is where the third party logistics find place and have been successful enough to add value and flexibility to the logistic chain of ecommerce giants. 3PLs can provide volumes of discounts and also help in building a wide resource network in the most cost effective manner. They can make improvements and adjustments in every part of the supply chain whenever it is needed. Moreover, by outsourcing the service to 3PLs, these online retail companies can save a huge amount of their money and time as it eliminates the need of investing in warehouse, technology, trained staffs and transportation. Also, it eliminates the need to worry about the billing, packaging, paper works, training, optimization etc. They very well manage the inventories, reporting and visibility through online tools and so, outsourcing the delivery process to 3PL companies is definitely a good idea.
Goals achieved
Moving back to 2015, we can see how different e-commerce sites launched different strategies so that they have a cutting edge over their competitors. For instance, Snapdeal launched ‘Snapdeal Instant’ which claimed to deliver goods within 1 hour of placing order. They also launched strategies like four-hour delivery, card-on delivery and 90 minutes reverse pickups. It also made big acquisitions last year apart from roping in GoJavas which reduced its delivery time by a whopping 70%.
Flipkart even partnered with stores which will be acting as alternate delivery channels and where customers will get the chance to pick up their orders as per their convenience. “By bringing together core capabilities of IoT, devices, data and automation, we have started implementing the automation technology to pick and move packages to designated picking station, among several other applications that make warehouse processes quicker and smoother,” as said by Ekart, logistics partner of Flipkart.
2015 also witnessed the enhancement of local delivery setups to improve the delivery time. Paytm also launched a two-hour delivery model for smart phones quite similar to Snapdeal. They expanded their network of fulfillment centres and return processing centres extensively across the country.
2016 is all set to witness more effective deliveries in the tier-II and tier-III cities across the country. Snapdeal has even started building its logistics network in the remote areas of the country and has started with the north east regions. Amazon leaped one step even further. It tied up with an NGO to deliver goods across tier-III and tier-IV town with the help of the logistics company, Connect India E-commerce Ltd.
The exponential growth of Amazon is not hidden. With the introduction of “Prime Air”, a drone which will do the deliveries, the company has proved that innovation lays its foundation. The drones are expected to be available to customers within 4-5 years which will deliver products to customers within 30 minutes of ordering. The products should meet the criteria of weighing less than 5 pounds and fortunately enough, most of the products sold at Amazon weigh less than 5 pounds. A prototype has already been developed which has become a prominent eyebrow-raising issue. Here’s the video that shows what “Prime Air” is all about.
Challenges
Logistics in India is still not completely developed and is a great challenge as infrastructure still needs major upgradation. While roads will continue to be the major medium of transportation, government really needs to shift its focus on building and improving the highways, flyovers etc. The government’s plan to invest a total of $10 trillion in building highways and shipping sector by 2019 gives some hope.
Vehicle tracking is crucial for effective route planning and control which if done inefficiently can incur huge loss. Last year, Flipkart invested in BlackBuck for capturing data which helped it to a great extent for accomplishing faster deliveries. Many logistic companies have even started collaborating and working closely with cold logistics to manage and deliver perishable items. Delivering perishables at a reasonable cost effectively is probably the next big thing in the logistics industry.
Last-mile delivery is another major challenge in the field of e-commerce, logistics and retail. One-third of the total delivery cost is consumed by LMD alone. Inefficient LMD can have serious consequences like slow response rate, inefficient service, low customer satisfaction and retention etc. Moreover, locating the right address of customers is also a major concern for delivery boys. Time is money nowadays and also managing the field workforce in this competitive environment can be very tricky. The challenge can be overcome effectively only through mobilization.
Most of the logistics models are built keeping forward logistics in mind. This has given rise to problems in reverse logistics. There can be several reasons for reverse logistics, for example, worn-out packaging, customer dissatisfaction, slow-moving product, cancelling of products by customers, packaging changes etc. Handling all these require a large network of team which means additional cost and complexity as this means performing the whole transaction again in reverse. The problem can be solved if more startups operating in the field of reverse logistics join hand with the biggies.
The customer base in India is varied and roughly spread across the demographic. Despite rapid immigration to the cities, a major population still dwells in the villages. Reaching them is a mammoth task due to illiteracy, poor infrastructure and age-old mentalities. Even the educated people of rural India face problems to operate internet. More often than not, the problem that exists is that most of the villages don’t have access to internet at all. The North East region of the country is still in isolation. Most of the delivery in India occurs through COD. Since these areas don’t have any third party logistics, the ecommerce companies are forced to take the help of private courier companies resulting in increased costs. So, they fail to allow COD in these areas and this ultimately leads to fewer orders as people, in rural areas, don’t possess debit or credit cards.
After Loginext, GoJavas, Orange etc, it is time for logistics startups like Roadrunnr and Delhivery to join hands with these major e-commerce portals.
With so many partnerships coming into existence, e-commerce and logistics industry can only get bigger to see a bullish growth. This is by far best time for entrepreneurs to consider jumping into the e-commerce wave as the industry is witnessing growth like never before. Summing it up with the quote as said by M. Cox., “Behind every great leader, there was an even greater logistician.”
What are your views regarding the transformation of logistics industry? Has your business seen a significant rise due to the development of the logistics space? Do let us know by commenting below.
