Lo­gis­tics drives e-com­merce mar­ket ................................................................................

The e-com­merce mar­ket is grow­ing fast, but the suc­cess of this mar­ket re­lies heav­ily on ef­fi­cient han­dling of lo­gis­tics. It’s time to recog­nise this in­dus­try as a key vari­able to drive cus­tomer ex­pe­ri­ence and reach, say ex­perts.

Cargo Talk - - Front Page - KAL­PANA LOHUMI

In­dia’s in­ter­est and cu­rios­ity in the e-com­merce lo­gis­tics is on a rise. The suc­cess of e-com­merce mar­kets re­lies heav­ily on ef­fi­cient lo­gis­tics. The ris­ing e-com­merce has main­tained the standard of the In­dian lo­gis­tics in­dus­try dur­ing re­ces­sion. The in­creas­ing pen­e­tra­tion of in­ter­net and smart­phones across the coun­try, in­crease in the num­ber of ur­ban house­holds, ease of pay­ment, ac­cess and va­ri­ety that on­line shop­ping of­fers, act as mar­ket driv­ers. How­ever, the mo­ment an or­der is be­ing placed, a lot of work and re­sources goes to get it par­celled at the cus­tomers’ place. Here comes the role of lo­gis­tics and ware­hous­ing.

Recog­nis­ing lo­gis­tics as a key vari­able to drive cus­tomer ex­pe­ri­ence and reach, sev­eral e-com­merce com­pa­nies have also in­vested in build­ing their lo­gis­tics net­works and ca­pa­bil­ity. Lo­gis­tics is thus a key en­abler for growth of the e-com­merce re­tail sec­tor and is in­creas­ingly emerg­ing as a dif­fer­en­tia­tor in terms of cus­tomer ser­vice and sat­is­fac­tion. To build-up their scale while sus­tain­ing busi­ness mar­gins, e-com­merce com­pa­nies and lo­gis­tics providers need to work in col­lab­o­ra­tion to drive the in­dus­try for­ward. CARGOTALK ex­plores how e-com­merce fo­cussed lo­gis­tics com­pa­nies are rid­ing the wave in the coun­try.

An­shul Singhal, CEO, Em­bassy In­dus­trial Parks, says, “Lo­gis­tics sec­tor in In­dia is evolv­ing rapidly and is con­sid­ered as the back­bone of the new age con­sumer econ­omy. The lo­gis­tics needs of the in­dus­try are chang­ing rapidly with the ever-evolv­ing busi­ness mod­els. The in­dus­try has been wit­ness­ing a quick scale-up in-ser­vice ori­en­ta­tion and com­plex­ity with an in­creas­ing em­pha­sis on ser­vice lev­els, in­creased pen­e­tra­tion in Tier-II and Tier-III cities. The ev­er­grow­ing in­ter­net users and smart­phones across the coun­try, in­crease in the num­ber of ur­ban house­holds, ease of pay­ment and con­ve­nience are boost­ing the suc­cess of e-com­merce fo­cused lo­gis­tics com­pa­nies. It is pre­dicted that over 85 per cent of all busi­ness will be dig­i­tal within the next five years.”

“Ware­house op­er­a­tors and lo­gis­tics firms need to re­act quickly by im­ple­ment­ing the lat­est tech­no­log­i­cal in­no­va­tions. E-com­merce mar­ket has ex­pe­ri­enced as­ton­ish­ing growth over the last decade and is suc­cess­fully chang­ing the way peo­ple trans­act. Suc­cess­ful e-com­merce thrives by wel­com­ing new lo­gis­tics mod­els and an ef­fi­cient sup­ply chain setup is a mas­sive source of com­pet­i­tive ad­van­tage for the firms. From ef­fi­cient trans­port man­age­ment sys­tem to data an­a­lyt­ics, cloud com­put­ing, In­ter­net-of-Things and en­ter­prise mo­bil­ity solutions, the year has seen many in­no­va­tions in the lo­gis­tics in­dus­try. The sup­ply chain is be­com­ing more cus­tomer-cen­tric and it is the most im­por­tant fac­tor in e-com­merce fo­cused com­pa­nies. The lo­gis­tics sec­tor spe­cific to e-com­merce re­tail­ing in the coun­try was val­ued at USD 0.46 bil­lion in 2016 and is pro­jected to wit­ness a CAGR of 48 per cent in the up­com­ing five years to reach US $2.2 bil­lion by 2020. To build-up their scale, while sus­tain­ing busi­ness mar­gins, e-com­merce com­pa­nies and lo­gis­tics providers need to work in col­lab­o­ra­tion to drive the in­dus­try for­ward. E-com­merce fo­cussed lo­gis­tics will only grow from here on and will change the tra­di­tional way,” he ex­plains.

San­deep Pa­doshi, Co-Founder & Di­rec­tor, Wow Express, points, “The growth of e-com­merce has paved the way for more op­por­tu­ni­ties for the lo­gis­tics sec­tor. For the fi­nan­cial year 2016-17, e-com­merce sales reached the US $16 bil­lion with a pro­jec­tion of a seven-fold growth within the next two fis­cals as es­ti­mated by Mor­gan Stan­ley. By 2020, on­line com­merce sales is ex­pected to cross $120 bil­lion. E-com­merce fo­cused lo­gis­tics com­pa­nies are go­ing to en­joy the ben­e­fits of the grow­ing e-com­merce sec­tor.”

“E-com­merce com­pa­nies are ex­pand­ing their reach and are ex­tend­ing to reach Tier 1 and Tier 2 sec­tors. This is also help­ing lo­gis­tics com­pa­nies to ex­pand and in­crease their reach. E-com­merce fo­cused lo­gis­tics com­pany are also pro­vid­ing ware­hous­ing and e-ful­fill­ment ser­vice which

fur­ther helps to in­crease their growth,” he adds.

Ac­cord­ing to Lalit Bhard­waj, Founder, FlyMyPar­cel.com, “E-Com­merce fo­cused lo­gis­tics com­pa­nies are the most re­li­able nowa­days. Lo­gis­tics is a back­bone of e-com­merce com­pa­nies; usu­ally this was out­sourced pre­vi­ously. But now the gi­ant e-com­merce has started lo­gis­tics of their own. Now, zone wise ware­houses have been de­vel­oped which will cre­ate job op­por­tu­nity as well as the eco­nomic growth of our coun­try.”

Bipin Kulka­rni, Vice Pres­i­dent – Sales & Mar­ket­ing, Spear Lo­gis­tics, in­forms, “In the last three to four years, 3PLs have emerged to take ad­van­tage of scale and ef­fi­ciency through a tech­nol­ogy first ap­proach. Still many e-com­merce play­ers pre­fer to their cap­tive units to do the ful­fill­ment. How­ever, with ad­vent of tech­nol­ogy, top e-com­merce play­ers across In­dia have now started out­sourc­ing the ful­fill­ment till last-mile de­liv­er­ies to spe­cialised 3PL player. In­dian e-com­merce mar­ket to­day is served by a mix of cap­tive and third-party lo­gis­tics play­ers.”

Un­der­stand­ing the im­por­tance of re­sources and the amount of work in­volved in get­ting the or­der par­celled at cus­tomers’ place, Singhal says, “Once goods are pur­chased on­line by the cus­tomer, they pass through a se­ries of log­i­cal steps with an ob­jec­tive to de­liver them to the cus­tomer in the short­est pos­si­ble time. First-mile lo­gis­tics in­volves pick­ing up goods from the sell­ers and shift­ing it to the re­tailer’s ful­fil­ment cen­ter or mother ware­house, de­pend­ing on the need. In the in­ven­tory-led model, prod­ucts are sent to the ful­fill­ment cen­ter with­out pack­ag­ing/la­belling. In the mar­ket­place model, prod­ucts are packed and shifted to the ware­house for stor­age. It is im­por­tant to up­date the in­ven­tory in the Ware­house Man­age­ment Sys­tem (WMS) and to gen­er­ate the stock re­port.”

“Prod­ucts also go through ful­fil­ment stage where they are pre­pared for last-mile de­liv­ery. Then prod­ucts are sorted based on the de­liv­ery lo­ca­tion at the pro­cess­ing cen­ter of 3PLs and are con­nected fur­ther in the sup­ply chain through line haul de­pend­ing upon the fi­nal de­liv­ery lo­ca­tion. Line-haul stage in­volves con­nect­ing the main sup­ply cen­ter with the main de­mand cen­ter, via land or air de­pend­ing on the tran­sit time and cost. The fi­nal stage is the last-mile lo­gis­tics; this step in­volves dis­patch­ing and ship­ping the prod­ucts to the de­liv­ery hubs. From here, the prod­uct is shipped to the cus­tomers and this phase de­pends on man­power and in­fra­struc­ture. Most of the 3PLs face prob­lems in main­tain­ing their man­power due to high at­tri­tion rate and there­fore, face chal­lenges in re­li­able de­liv­er­ies. Ef­fi­cient trans­porta­tion is re­quired at each stage of the sup­ply chain, from phase one to fi­nal de­liv­ery. Only a good co­or­di­na­tion be­tween each com­po­nent would bring the ben­e­fits to cus­tomers and pro­vide the com­pet­i­tive ad­van­tage to the firm,” Singhal con­tin­ues.

Ware­houses have been planned in close prox­im­ity to the con­sumer which al­lows them to be re­gional dis­tri­bu­tion cen­ters

Adding to this, Kulka­rni says, “In our e-com­merce ware­houses, we are han­dling large vol­umes of or­ders of var­i­ous cat­e­gories of prod­uct i.e. from in­ex­pen­sive pen drives to high-end mo­bile phones, from ap­parel to shoes and so on. Each cat­e­gory of prod­uct needs to ful­fill within max­i­mum stip­u­lated time of three hours (for nor­mal de­liv­er­ies and for same day or­ders it is 45 min­utes), af­ter re­ceiv­ing an or­der. The idea is to ex­plain that It needs to be picked and packed within that time in­clud­ing in­voice and la­bel print­ing be­fore it is handed over to last-mile de­liv­ery part­ner.”

Pa­doshi notes, “Once an or­der is placed, the client will for­ward the or­der to the lo­gis­tics ser­vice provider, who will then send their re­sources to pick up the load from the client. The load is then brought to the near­est de­liv­ery cen­ter. It is then sorted out ac­cord­ing to the lo­ca­tions and the ship­ments are for­warded to each of their re­spec­tive lo­ca­tions. Once the ship­ment is re­ceived at the lo­ca­tion it is then sent to the clus­ter branch ac­cord­ing to their re­spec­tive pin codes. Once re­ceived at the clus­ter branch it is as­signed to a de­liv­ery agent who then goes and delivers the ship­ment to the end cus­tomer.”

On a sim­i­lar note, Bhard­waj points, “This is a big chain; when an or­der gets placed, that in­for­ma­tion goes to the stock yard to sort the ma­te­rial and dis­patch it as per the type of de­liv­ery. Ev­ery step of move­ment gets loaded on the web through the con­cern de­part­ment so that the cus­tomer could also know the live sta­tus.”

Unique chal­lenges

Talk­ing about the role lo­gis­tics plays in move­ment of bulky items, Pa­doshi says, “The tough­est part in the move­ment of bulky items, pre­dictably, is the ac­tual trans­porta­tion. For e-com­merce play­ers, work­ing out the lo­gis­tics for bulky items is among their big­gest chal­lenges. For sup­ply chain, items are di­vided ac­cord­ing to size Nor­mal and Large. Home ap­pli­ances and fur­ni­ture are Large, while ev­ery­thing else is in Nor­mal. Ap­par­els, books, elec­tron­ics etc., which fall in the Nor­mal cat­e­gory, fol­low the in­ven­tory model, while Large items are de­liv­ered lo­cally. The ship­ment charges are made ac­cord­ing to the weight of the pack­age, not the item. Vol­u­met­ric weight is more than the ac­tual weight of the par­cel. When a five kg chair is packed, it can weigh 30 kg. Full trucks min­imise the move­ment, and hence pre­vent break­age de­spite bumpy roads. But the poor con­di­tion of high­ways de­mands ef­fi­cient pack­ag­ing to pro­tect the goods, lead­ing to higher pack­ag­ing costs.”

Bhard­waj stresses on wide and straight high­ways to han­dle bulk move­ment. He adds, “There is no ex­clu­sive freighter and in­fra­struc­ture within In­dia to han­dle the bulk items by air freight. So nowa­days, it is to­tally de­pen­dent on ground trans­port.”

Re­quire­ments from ware­houses

Ex­plain­ing the re­quire­ments In­dospace ful­fil as ware­houses, Singhal no­ti­fies, “For decades, con­sumer prod­ucts have been dis­trib­uted to re­tail stores in bulk, through loaded trans­porta­tion. Now, on­line or­der­ing is push­ing brick-and-mor­tar re­tail­ers be­yond this tra­di­tional sup­ply chain in­fra­struc­ture. Ware­houses and dis­tri­bu­tion cen­ters are planned in re­mote lo­ca­tions where costs for land, labour, and taxes were low. Large ware­houses de­vel­oped as dis­tri­bu­tion cen­ters are be­gin­ning to as­sume some of the char­ac­ter­is­tics of stores, as more re­tail­ing ac­tiv­ity starts to hap­pen on­line. They are highly var­ied in size and shape, pur­pose and in­tent, and de­ploy tech­nol­ogy to meet ris­ing cus­tomer ser­vice ex­pec­ta­tions. In e-com­merce, the dis­tri­bu­tion cen­ter pro­vides much of the cus­tomer ex­pe­ri­ence which has in­tro­duced the emer­gence of mul­ti­level cen­ters, also called ful­fil­ment cen­ters be­cause they give flex­i­bil­ity of time in de­liv­er­ing prod­ucts to the con­sumer. Ware­houses have been planned in close prox­im­ity to the con­sumer which al­lows them to be re­gional dis­tri­bu­tion cen­ters. This makes it eas­ier for on­line prod­ucts to be picked, packed, re­turn and shipped ef­fi­ciently, con­sis­tently and cost-ef­fec­tively. At Em­bassy In­dus­trial Parks, our ef­fort is to make each park a self­sus­tain­ing busi­ness ecosys­tem cater­ing to seven ma­jor cities.”

“CCTV cam­eras, fire ex­tin­guish­ers, goods han­dling equip­ment and se­cu­rity are the ba­sic re­quire­ments from ware­houses. And, most im­por­tantly, the ware­houses should be on the wide road and easy ac­cess for the big and long ve­hi­cles,” opines Bhard­waj.

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