Upping the ante

Upping the ante

How e-commerce companies are betting on efficient logistics to stay ahead of the pack.

In the wake of competition with global brands such as Walmart and IKEA entering India, e-commerce companies are constantly trying to revamp their strategies as the battle to gain the market share has only become fierce. The success of the online business now entirely depends on how the companies are fulfilling demands of the new-age consumer through bouquet of delivery options, time taken for delivery and quality of the delivery service.

In a nut shell all this boils down to a strong logistics and supply chain, and online players cannot undermine its importance. Indian e-commerce retail logistics industry is expected grow 36 per cent in the next five years, according to a joint report by KPMG and CII.  The projection is on the back of the strong growth of e-commerce industry in India. With the spurt in e-commerce, the online retail start-ups have started to witness the need of specialised logistics providers to support their growth as traditional courier partners were not able to meet their targets. 

The sector is largely serviced by traditional logistics service providers, e-commerce retail focused logistics service providers and captive logistics arms. The market is largely a captive market (49 per cent share), however, a sizeable share is still dominated by new age players catering especially to e-commerce retail,” according to the report.  The study further revealed that return shipments constitute 18-20 per cent of total shipments in the e-commerce industry. In an e-commerce, the two critical levers -supply chain and logistics are at the core of any business and e-tailers have been trying to strengthen this aspect including new ways to bring down the cost. Last mile delivery is one of the biggest challenges for every traditional e-tailer in the country. “Low efficiency of resources and route planning problems are core issues that magnify and make the whole system inefficient and expensive. This coupled with the challenges in delivery infrastructure bring additional challenges to the state of last mile. It will be interesting to see how customer order density increases and whether that will allow e-tailers a lower last mile cost structure,” says Ebrahim Akbari, cofounder, Doodhwala.