Road to efficient deliveries with LSPs
The use of proper and planned logistics is imperative for survival in the cut-throat competition of the e-commerce industry. Thus, e-tailers often have to make a choice of partnering with either established logistics players or allowing new players in the
The growth in the e-commerce sector in India has gained speed with online retailers competing with one another to sell the products at the lowest possible price at an optimal delivery period. The survival of these online retailers entirely depends on the extent of coordina- tion between logistics techniques employed by their logistics service providers (LSPs).
Choosing the right partner
Though the initial criteria for partnering with an LSP depends on safety, economic viability and feasibility of the services, Neeraj
Aggarwal, Sr Director – Supply Chain, Flipkart views, “The capability to deliver across the length and breadth of the country within the scheduled/promised delivery time is the key requirement for a logistics firm. As a delivery partner, these firms should be able to offer order rescheduling, cancellation, returns and cash-on-delivery support plays an important role too.” Praveen
Sinha, Founder and Managing Director, Jabong.com views, “Having robust IT infrastructure, solid on-field operations and a passion for cus- tomer satisfaction are the factors that make a logistics firm the right partner. In addition, a shared commitment to bring down the cost of fulfilment is necessary in a competitive environment. The logistics firm should be ready to adapt its supply chain to suit the needs of the industry.”
Making the right choice
As timely and safe delivery of the commodity needs to match the customer’s expectations and therefore is the most important issue, the right choice of LSPs is essential for the survival of any e-tailer willing to beat its peers in terms of faster delivery and competitive pricing. Because of this, e-commerce giants constantly face the dilemma of whether to tie up with the existing players or the new-age logistics players who are making their presence felt owing to the varied benefits they provide.
Samuel Thomas, Director Transportation, Amazon India informs, “We work with both established and new players in the logistics space. Any courier player which can provide the best customer experience is a good fit for us. While making decision about the choice of supply chain providers,
Rajesh Kaul, Director - Supply Chain Management, Fashionandyou.com says, “Preference is given to established players but off late new players have also started providing services which are as good as the established ones.” Aggarwal adds, “We prefer a logistics partner who can support customer deliveries and returns to/from thousands of pin-codes. Services in nonmetros and rural areas are an added advantage as a lot of our orders come from these cities.” But,
Kaustabh Chakraborty, Vice President – Operations, Urban Ladder has a completely different experience to share. Chakraborty clarifies, “It is important for us to see that our logistics partners are willing to mould their way of working to our needs. We have generally seen the established players finding it difficult to respond quickly. The niche service providers are the ones we find most attractive since they show a willingness to cater to our needs as well as move quickly.”
Kashyap Vadapalli, CMO Pepperfry explains, “We do not give weightage to experience/years of establishment as we believe in encouraging entrepreneurs.”
Evaluating the services
The rapid transformation in ecommerce has changed the way esuppliers do business. As both the home-grown and foreign e-commerce giants strive to be customercentric companies, e-tailers rely on the services of established players as Gati, FedEx, DHL Express, Blue Dart, Aramex, Indian Postal Services, TNT Express and many others. Anil Khanna, Managing Director, Blue Dart Express opines, “e-commerce players look for LSPs who will reach its online buyers in tier-II and tier-III towns within the specified transit time, provide assured deliveries and reliable service quality. Cash being the key driver of and working capital for the e-commerce industry in India, e-commerce
players prefer LSPs who can handle cash in a safe and secure manner and remit it on a regular predetermined basis.” While discussing about the criteria that e-tailers follow while opting for a supply chain provider
Aditya Gupta, Zonal Business Head – North, DIESL pointed out that the LSP partnering with any e-tailer should be able to provide services round the clock, be able to invest in technology like Warehouse Management Systems, scale up operations, provide solution at multiple locations, be cost-effective, comply with labour laws and all other laws of the land and nevertheless, finan- cially resourceful. Vivek Bajpai, Chief-FSC E-Comm Logistics, Future Supply Chain Solutions added, “e-Tailers make sure that their service providers have serviceable pin codes, low delivery turnaround times, better service levels than their peers, competitive pricing coupled with valueadded services apart from providing cash-on-delivery service and an updated MIS reporting structure.” With the online Indian shoppers maturing and their expectations being at par with global consumers, one of the big drivers of growth of the e-tailers is a great door step delivery experience. Sanjiv Kathuria, Co- Founder and CEO, Dotzot briefs, “While evaluating a LSP the e-commerce company looks for an extensive reach and network and the ability to deliver not just in metro and tier-I cities but also to interiors of India. One more criteria is the LSP’s ability to handle reverse pick up for efficient return and exchange management. Cash-on-delivery is the biggest driver for online companies’ growth in India and also adds a lot of complexity to the delivery chain. The e-tailers are essentially looking at specialists in end-to-end fulfilment services.”
Diljeet Singh, Chief Business Development and Marketing Officer, Gati Kintetsu Express puts forward, “E-tailing companies face the challenge of integrating and coordinating the complex and time-sensitive flow of products from warehouse to store to home. In addition to that these companies need to constantly meet expectations of their customers.”
Engaging services of newbies
Innovative methods brought about by e-commerce have brought about improvement in the process of supply chain management apart from forcing the new players in the logistics sector to perform in a more efficient and economical manner than the established players in the market.
Naveen Rawat, Co-Founder & Director, Holisol Logistics, founded in 2009, elucidates, “As the e-commerce business is rapidly evolving, customers also look at flexibility and adaptability as key considerations as the LSPs may require to quickly realign as per changing business requirements.” As the doorstep delivery is fundamental in the growing segment of e-tailing space,
Sanjeev Saxena, Co-founder and Director, Ecom Express explains, “Customers are looking for efficient last-mile partners to handle their dynamic requirements. The partner should have wide coverage in tier-III and IV towns besides metros and other key towns and should have the ability to scale up their operation capabilities to manage promotional and festive seasons’ volume. Other key factors which customers expect are flexibility in servicing offerings, low return percentage and faster COD amount remittance.”
Engaging outside resources and outsourcing to them
More and more items are being bought by customers today using the ‘click & shop’ model approach. To keep up with the exponential growth of the e-tailing sector, the new LSPs are gearing up to their full potential to deliver shipments to the end consumers. Bagaria says, “The first and foremost thing we look is the Pin Code serviceability, unless and until both the companies (new and old ones) are offering the same kind of serviceability. The second priority of selection is the cost. The third is whether they are giving out on contract or whether they have their own services as lots of logistics companies have given their franchisees in different cities, which do not have a mandate of a quality. Apart from the aforementioned, technology is a big winner for us.” Sinha adds, “The division of business between existing and
new players is mainly based on service considerations. Service considerations include on-ground performance, meeting high service levels and the ability to deliver within restricted timelines.” Kaul explains, “We map each partner with delivery percentage for a fortnight and resolution time for queries raised and divide business accordingly; it keeps the competition healthy between all of them.”
Living up to its name
When asked if tying up with the established players is a safe bet and the underlying benefits for partnership of the e-tailers with the big established players, Hassan Mikail, Global Ecommerce Director, Aramex explains, “Not all e-tailers are identical. Established players offer end-to- end supply chain services to help both start-ups and well established businesses to launch or expand their e-commerce operations, including warehousing and integrated logistics, payment collection services, order processing, and outsourcing of customer service through various contact centres.” As it is imperative to have a wide network to meet the growing need of the e-commerce customers, Khanna emphasises, “Our services to this segment can be broadly differentiated on three parameters – service offerings, technology and service quality. These three elements combined form the bedrock of our leadership in the e-commerce logistics space.” The extensive experience of established players equips them with the means and knowledge of handling a myriad of logistical challenges. Most importantly, established reputed players are good at what they are doing and have a track record to fall back on, which is why they hold the prime market position. Singh confirms, “Gati, with its 25 years of experience in express distribution and supply chain management, already comes with existing reputation, goodwill and trust that are critical for third party management on behalf of the e-tailing companies.”
Delivering as per promise
As the boom in e-commerce has led to new logistics players com- ing to the field, it cannot be denied that the new-age players have managed to make a mark for themselves in the industry by providing various additional benefits. Pranav Patel, Managing Director, Swapnex Logistics points out advantages as reliable transit times and delivery, single point of contact convenience, project management methodology to reduce risk, cost and time on start ups and DMAIC process improvement methodology to drive continuous improvement and adapt to your changing needs.
Advantages of in-house logistics firm
The race to transport millions of commodities safely within the promised time frame and the scramble to stay ahead in the race has pushed the e-tailers to invest in their own logistics supply chain. An example of the same is Flipkart which largely depends on E-kart to meet 70 per cent of its deliveries. Aggarwal explains, “Currently, our deliveries are taken care of by a combination of E-kart Logistics, our dedicated last-mile delivery partners along with third-party courier services including India Post. Today we are using four or five big partners for delivery, which include our dedicated logistics partners. As Sinha views, “There are benefits in having an in-house logistics firm as it enables developing and piloting newer services like express and assured delivery, of accurately planning last mile loads especially during peak seasons.”
There are very few e-tailers in the country having their own delivery arm. The concept of having its own logistics arm arises only in cases of high delivery volumes with the company trying to gain control over last-mile connectivity.