Indian e-commerce industry is seeing a rapid rise in customers joining the home-delivery revolution, with the demand for 24- and 48-hour delivery resulting in more number of logistics service providers popping-up to serve retailers and customers. However, without efficient systems to meet the needs of instant gratification, customers will begin to abandon ship therefore it is both the responsibility of the industry as well as of the customers to be quicker and better. As companies plan long-term strategies to overcome existing bottlenecks in this sector and for ecommerce growth, it makes sense to adopt key digitalisation initiatives and outsource warehousing operations to 3PLS that offer greater efficiency, flexibility, at much lower costs. It’s akin to upgrading the jet while traveling at Mach speed, reports Ritika Arora Bhola.
According to a report by Ken Research titled ‘Indian E-commerce Logistics Industry Outlook’, the Indian e-commerce logistics industry is expected to grow to Rs 492.8 billion by 2025 with a positive five-year CAGR of 23.6 per cent in terms of revenue during the forecast period FY’2020-FY’2025F due to increased demand from tier II and below cities owing to increased internet penetration in these areas. The industry is witnessing massive development of a robust e-commerce logistics ecosystem.
Additionally, as per the sources, there are over 102 key logistics providers at present operating in South-east Asia today. Certainly, e-commerce and logistics are the industries that came into the spotlight during the COVID-19 pandemic. Fear of contagion, lockdown restrictions and most importantly, the propensity to buy from the comfort of the home resurrected the e-commerce industry.
E-commerce today has became a necessity like never before for businesses and individuals, and greatly facilitated right up to the last-mile by the logistics industry—from 3PLS to start-ups that provide effective e-commerce order fulfilment and inventory management, including the storing, picking, packing, and shipping of items sold online.
Ketan Kulkarni, Chief Commercial Officer at South Asia’s premier express air carrier and premium logistics services provider Blue Dart says, “As the pandemic continues and fear of contagion prevails, it will lead to customers inclining towards online shopping. Revenge buying, an act wherein individuals who have missed shopping at their favourite outlets due to the pandemic overindulge in retail therapy, will continue going forward, especially in the event of a third wave.”
“The government’s push towards digital initiatives and the ubiquitous presence of digital money will continue to speed up the outreach and adoption of digital wallets. Digitisation and the adoption of technology such as data analytics, AI, drone technology to support last-mile delivery will continue to transform the e-commerce supply chain industry. Further, demand generation from emerging towns across tier II, III, and IV cities will also play the role of a major growth driver. Going forward, even in the post-COVID-19 phase, e-commerce logistics is going to be very significant.”
Skyrocketing consumer demand for e-commerce has resulted in an influx of online stores emerging, which, in turn, has given a boost to the demand for seamless, end-to-end logistics services amid the cut-throat competition. The entry of e-commerce giants like Amazon in the Indian market, along with technological innovations in the last-mile delivery system has also proven to be a major turning point for the country’s logistics ecosystem. Large-scale digitisation, contactless operations, and quick deliveries have further spurred growth.
Manish Porwal, Founding Member and VP for Global Sales Enablement atlogisticsmanagement software services firm LogiNext says, “There are several factors that have led to this boom–internet penetration, development in the payments space, advanced mapping solutions, and the pandemic which has given a huge push to the on demand economy. Buyer behavior has completely shifted–same day and next day delivery is the norm now, flexibility in terms of delivery time windows, contactless deliveries- and many such trends have emerged which are here to stay. E-commerce, in general, has been accelerated by 5-7 years and the above pointers have been the key growth drivers.”
“The pandemic has definitely accelerated the shift from offline to online shopping, especially in tier II and tier III markets and beyond. In fact, since April 2020 our first-time-buyers (FTB) business grew at a faster rate than repeat buyers in tier II cities. Factors that have fostered this trend are the nationwide lockdowns leading to companies and educational institutions shifting to work-from-home and study-from-home. This has resulted in increased need for efficient logistics infrastructure and services. With built in proprietary large item distribution logistics model, we believe we are adequately geared to tap these opportunities as they appear,” says Piyush Agarwal, Head of Supply Chain atIndia’s largest online furniture retailer Pepperfry.
“Additionally, ecommerce industry is going through a phase where serviceability is just one important aspect, but the key differentiator is how quickly and efficiently you are able to serve the customer and the overall experience you can deliver to customer. With expanding network of distribution centres, our aim is to reach every potential customer, and the fact that we own our supply chain shields us from external factors and gives us better control and visibility on customer experience.”
“We have been focussed on further bolstering our offerings and technological infrastructure to provide hassle-free shipping and fulfilment services while enabling more D2C e-commerce sellers to establish their presence online. When we consider the key growth drivers, it is the intelligent, integrated logistics and supply chain network that makes for a more efficient and customer-centric e-commerce experience,” adds Saahil Goel, CEO and Co-founder at fast-growing e-commerce logistics and courier aggregator Shiprocket.
Innovation mode and optimisation strategy
Over the last few years, e-commerce supply chains have seen an era of unprecedented growth as digitalisation has firmed its grasp and customer expectations have evolved. While the biggest takeaway from the pandemic was the importance of technology and digitisation, industry leaders have been working towards leveraging these improved systems and processes to make the most of the man-tech combination.
AI adoption is taking off in the supply chain, due to its potential to solve the complexities of running a massive logistics network. Implemented correctly, AI helps companies to make smarter, reliable, agile decisions and also anticipates problems. Proactive systems enabled by AI are raising the quality of service, exceeding customer expectations for on-time and undamaged deliveries. They’re further improving efficiency through automated compliance processing. The result is lower costs and fewer problems across the logistics network.
“A post-COVID world needs a sustainable solution that ensures that in the event of another pandemic, organisations can ensure ‘business-as-usual’ with minimal disruptions and zero losses. The formation of the Blue Dart Med-Express consortium is a step in that direction which will sees drone flights deliver critical medical supplies to the remotest parts of the country. I believe technologies enabling near-autonomous facilities, robotics and 3D/additive manufacturing are going to be adopted very quickly. The underlying theme of a ‘technology-led transformation’ would revolve around creating business models that will survive in a ‘less-contact’ society,” comments Kulkarni.
“Right from receiving an order update and tracking the order to receiving real-time feedback from consumers, technology has made the entire process hassle-free for consumer brands that have inbuilt supply chain infrastructure as well as specialised logistics services. IoT and evolving technologies like AI, ML, neural networks show a lot of potential when it comes to cost optimisation and operational efficiency,” says Agarwal.
“At Pepperfry, inventory planning, route optimisation, vehicle load optimisation, warehouse management are some areas where we use new-age technologies. We intend to keep ourselves updated with developments in this field and use them to our advantage to solve some of the common problems faced by the e-commerce logistics industry.”
“Big data, AI and ML have truly become mainstream now. Route planning, route optimisation, demand forecasting, predictive ETA for deliveries and all such features see implementation of AI and ML for logistics automation,” Porwal adds.
“At LogiNext, we’ve tracked more than 12.5 billion location data points via the deliveries our 200+ enterprise clients have made across the globe. All this data when fed to AI and ML algorithms provides a rich playing ground to improve operational efficiency. The visibility and tracking of how previous orders have been delivered and detailed analytics built on top of them give meaningful insights to give greater cost and operational efficiencies in e-commerce logistics.”
“AI and big data have undoubtedly been instrumental in transforming the entire e-commerce logistics ecosystem, especially amidst the pandemic when there was an increasing need to automate/digitise operations,” Goel agrees.
“Technology-enabled operations help logistics platforms choose the right carrier mix and select the optimal fleet size and location for frictionless services. Additionally, they minimise RTOs, enable predictive analytics for improved accuracy, decipher customer behaviour based on past patterns, and automate supply chains. Shiprocket has strong technology-based core operations, which have helped us to build on it further over the years. We will continue augmenting our offerings and further contribute to the growth of the e-commerce logistics sector.”
Looking at challenges from all sides
With door-to-door delivery, same day or next day deliveries emerging as major trends—the logistics industry has been working relentlessly, to ensure that customers receive their shipments on time and in best quality. While this growth has put the spotlight on the key role logistics plays in an economy like India, there is unprecedented pressure to scale up and increase efficiency while optimising costs.
“The solution to a majority of the hurdles faced, lies in embracing technology and automation to our advantage. The logistics industry is experiencing the adoption of technology across the chain from first-mile to last-mile. The modern supply chain will include lean operators who are able to ramp up and achieve high service levels at a short notice. A big advantage for India is the resources we possess as well as the sheer talent of skilled manpower. This makes it a great landscape to find a balance between artificial intelligence and augmented intelligence,” feels Kulkarni
“Use of cutting-edge delivery platforms to rapidly alter delivery workflows based on customer needs, provide real-time notifications on delivery progress or delays, and enabling payments through secure digital gateways will further enhance customer service initiatives,” he adds.
Pepperfry realised that the logistics infrastructure in India for large item shipping is significantly under-developed. Therefore they built proprietary big-box logistics network in April 2013 using a hub and spoke model. The company today operates in 20,700 locations in 500+ cities across the country.
“Today, we have 23 distribution centres, 4 warehouses (which also act as DCs), a carpenter desk of 200+, a fleet of 400+ trucks delivering 100,000 large items per month. Furthermore, in early 2021, we strengthened our last-mile delivery fleet by introducing 190 plus new and bigger vehicles,” shares Agarwal.
“Although e-commerce logistics sector has grown astronomically, there are certain challenges/constraints that sellers and platforms face,” Goel highlights.
“Weight discrepancies/differences, order returns, Return to Origin (RTOs), and NDR are some of the major constraints that sellers face. If not resolved efficiently, they can significantly impact the profitability of a business. To solve these issues, data-driven decisions rather than manual judgment is the need of the hour as this will ensure impeccable customer service, optimise costs, and improve efficiency and productivity in the overall logistics operations,” Goel highlights.
Taking account of the same, Porwal says, “Lack of digitisation is the biggest constraint when it comes to supply chain processes of biggest retailers. Brands need to undergo a rapid digital transformation journey to compete with the Amazon’s and Uber’s of the world when it comes to efficiency and speed of delivery or movement of goods. And this is where visibility and automation platforms like LogiNext come into the picture to help companies build a sustainable path for long term growth.”
Last-mile deliveries: Complex, Costly, Critical
E-commerce is all about last-mile delivery. Speed, efficiency, accuracy are considered as three major pillars on which e-commerce activities rely in today’s competitive market scenario. Overall, last-mile delivery is very crucial when it comes to logistics. While the ongoing pandemic led to several shifts in consumer shopping trends making the logistics industry refocus on last-mile delivery services, the dependence on e-commerce increased for both essential and non-essential commodities. The sector witnessed an impressive surge in demand for quick deliveries. Ensuring the safe handling of shipments became a priority and service providers diligently achieved that with meticulous last-mile planning.
As more brands start delivering orders to consumers directly, collaboration for shared delivery logistics will become increasingly important. At the moment, more than 90% brands are considering joining forces with other consumer product firms to create shared warehouses and logistics for last-mile delivery.
“Last-mile delivery is crucial in today’s logistics ecosystem since it largely influences customer satisfaction, delivery, time and cost of shipping/operations, and the ease of use for the services,” says Goel.
“It is vital to understand the customer, their requirements and preferences, and ever-evolving purchasing behaviour to build a resilient supply chain. Leveraging cutting-edge technology to enhance supply chain visibility and facilitate accurate inventory tracking, increasing the speed-to-delivery with on-demand fulfilment and introducing customer centric products such as OTP-based deliveries can contribute to a robust supply chain network and improve customer satisfaction,” he observes.
Shiprocket, Goel says, has a customer-centric approach and have remained committed to ensuring frictionless, efficient last-mile delivery services through its tech-powered operations and services.
“Last-mile delivery operations are the most critical when it comes to delivery management since it is facing the end customer. The entire end customer experience depends on a brand’s last-mile delivery operations,” stresses Porwal.
“Was the ETA communicated properly? Was the order delivered responsibly (as communicated)? Are there solid feedback mechanisms in place? Is there a way to ‘return’ or ‘exchange’ a product and track that? All of these questions come up in the last-mile delivery scenario and having a transportation automation platform that offers a white-labeled solution to brands is a solution to this. A modern TMS hosted on the cloud with a user friendly interface gives complete visibility to take decisions and ensure a resilient supply chain which gives a great end customer experience,” he explains.
Talking about their efficient strategies, Kulkarni says, “Blue Dart’s strategy over the last 37 years is a tried and tested success story that emphasises—Customer Centricity, Reliability, Responsiveness, and Resilience—which define our strategy in business. Most significantly, it came to the fore during the pandemic.”
Blue Dart is known for its strong domestic network which reaches into the heartland of our nation. As a part of the DPDHL Group, Blue Dart has access to 220 countries and territories across the world apart from the 35,000+ locations we service in India.
“We leveraged digitisation and technology even during the challenging period to introduce a number of initiatives to offer our customers a great shipping experience when they choose us,” Kulkarni adds.
“We launched the ‘My Blue Dart’ mobile application to allow our customers to book a shipment, track a shipment and find price estimates, etc. on the go. We pioneered the contactless delivery feature for our popular Door Pickup and Door Delivery services following the most stringent health and safety standards and procedures designed to eliminate or minimise contact during delivery of shipments. As such, we are aligned with our Group’s ‘Strategy 2025 – Delivering Excellence in a Digital World’ through which we intend on further simplifying the processes for our customers by harnessing the power of technology.”
“We had ramped up our pre-existing specialised Temperature Controlled Logistics (TCL) solution to successfully transport the vaccine into the remotest village and the most crowded city. In order to extend our reach from the 35,000+ locations we already service.” “Most recently, we launched the Blue Dart Med-Express consortium and recently conducted trials of drone flights, leveraging the use of future-ready technology to ensure mission critical supplies are delivered to the most interior parts in the Indian heartland.”