What makes ecommerce Logistics challenging in India?
Logistics always was and still remains the most important part of the ecommerce business, because it is the point where an online transaction gets transformed into an offline, hand-to-hand delivery. It is easy to see how successful online retail ventures owe their success to a sharp focus on the logistical part of their operation. The Indian ecommerce industry is looking at a steep rise, slated to touch $100 billion by 2020, and $220 billion by 2025 according to Merrill Lynch. The implications of this growth are enormous. It may well be said that the face of ecommerce and online retail ten years from now, will be completely unrecognisable from what it is today. One of the major forces behind this change would be technology.
It is interesting to see how much of what we know to be the logistical process is invested in technology. All our products are first inventorized, converted into data using SKU codes – before a single transaction even begins. Further movement of each product then depends on the accessibility of this data – if a product is not in the database, it does not exist.
The last mile fulfilment is more often than not a headache for most online sellers. This is because the last mile is generally when the product is truly off the grid. There has always been a debate on whether to outsource the last mile delivery or to take it in your own hands, but maybe technology can give us a third option. Let us take a brief look at the current logistics scenario in India, how far have we come, how much further do we have to go –
Ecommerce Logistics in India
1. The Rise of Tier 2 and Tier 3 Economies
Tier 2 and 3 cities are expected to contribute around $350 million in 2018, making them extremely viable potential markets. The problem of accessibility towards the tier 2 and 3 cities can be looked at as an opportunity to make the first mover advantage. For this, it is essential for logistics and fulfilment companies to establish a robust network with nodal points delivering to the tier 2 and 3 cities with speed and efficiency. As the internet penetrates deeper into the Indian demography, it is the tier 2 and 3 cities that are going to stand out and make a difference, as opposed to the saturated markets of the tier 1 and metro cities.
2. Time to Revolutionize Cash on Delivery?
Cash on Delivery was an important selling point for the Indian online retail industry, which was completely taken care of by logistics. In fact, we can even say that it was the Cash on Delivery system that really warmed up the Indian consumer to the idea of online retail – knowing that one did not have to pay until one held the product in their hands was a big relief for the Indian consumer. That said, Cash on Delivery comes with its own set of problems.
It is estimated that around $8 billion will be handled in cash by the Indian ecommerce industry by 2018, which leaves it susceptible to problems like theft, fraud and reconciliation issues. Card on Delivery – a system that lets you swipe your credit/debit card on delivery of the product is an interesting way of moving forward and making the consumer comfortable with an electronic purchase.
3. Technology and Analytics
Tracking and handling returns is a major headache for logistics companies. Especially when the delivery is in emergent areas when it comes to ecommerce, the industry is certainly not adept at keeping an eye on the package at this point in time. It is time the Indian ecommerce industry actively invests in technology to find solutions to these problems. With developments in location access technology, wearable computing and data processing, it would be easier to answer questions like locating shipments in real time, or measuring and analysing service based on data collected on the field, and finding trends in delivery delays by studying the data.
4. Last Mile Delivery
Last mile delivery is generally the headache for most online sellers. The big question remains whether to outsource it or to make the extra effort and fulfil it yourself. This is because the company’s reputation is truly on the line when it comes to the last mile delivery. Various things that factor into this decision may be the delivery time, reliability of the courier, reach in terms of a geographical area and the overall cost incurred by the seller.
Again, monitoring technology seems to be the way forward when it comes to this decision. It would behoove the seller to start out slow and test out logistics partners while finding new ways of recording and measuring data for comparison. The tier 2 and 3 cities again emerge as battlegrounds for this purpose, it is expected to be a general trend in the industry to see movement towards these largely untapped markets in the country.
This is what we have on the current situation of ecommerce logistics in India. To know more, get in touch with Browntape. We are India’s leading ecommerce experts, and we are always happy to help!