Delivery delays and other logistics challenges have forced online retailers build their own delivery systems. This, they say, helps raise service quality and build customer confidence.
Industry experts say third-party logistics players have not scaled up to meet the unique requirements of the evolving online retail industry.
Most logistics players have a transport industry background and do not understand how retail supply chain works, leading to delivery delays, explains Mr Dietmar Jobst, sourcing director, Fashionandyou. The company draws its logistics support from group company Ecommerce Express which has a fleet of 350 people delivering across India.
Own logistics team
Apparel retailer Zovi.com too has its own logistics team of 50 people to deliver in 10 cities where it had issues with third-party providers. In other cities, it relies on service providers.
Online retailers also face delay in getting cash collected from customers in the case of cash-on-delivery (COD) option, says Mr Satish Mani, Founder and CTO, Zovi.com. Today, 80 per cent of deliveries to customers (as opposed to 50-60 per cent with third party players) happen within three days, he says.
Flipkart's delivery team Flipkart Logistics operates in 30 cities and plans to expand further. Mr Binny Bansal, COO & Co-founder, says, “E-commerce in India today is still at a nascent stage and require a lot of infrastructural improvements.”
Mr Mani says that operating own logistics also works out to almost half of third-party costs. “Third-party companies have their own aircraft to carry freight, which is expensive. Also we ensure there are enough volumes to deliver so it works out cheaper.”
Other innovations
Companies like edabba.com are trying other innovations in deliveries. For millions of people do not have access to the Internet, but would still like to shop online, edabba.com has set up Trust Points (TPs) across the country. These are managed by small shop-owners who own computers. People residing around the area can shop through TPs and also have their goods delivered there.
“Courier company delivery boys may not be able to locate every shopper's home,” says Mr Manoj Kumar, Co-founder of edabba.com, which calls itself ‘Bharat ka online mall.'
Edabba currently has 74 TPs with plans to have 5,000 in 3-4 years.