Carving growth path together

Supply chain management is an inseparable part of e-retailing. “E-commerce is a business that runs on supply chain management. Sound supply chain ensures success of the business. E-commerce is growing rapidly in India and this increases the number of opportunities for us. E-commerce companies have a website up in place and they offer products in a virtual market. In most cases, they don’t need actual inventory to market their products, which works very well in their favour as inventory is a big challenge in brick and mortar stores,” says Pyush Lohia, Director, Lohia Warehouse Pvt Ltd, a Noida-based sourcing and warehousing company.

At present, what needs to be worked upon in logistics is micro-level management. A good supply chain, which is timely and cordial with the customers, ensures ever growing size of orders. “E-retail and logistics go hand in hand, and with e-retail websites doubling every week, nothing can be in place without logistics companies. In this competitive market, there is a dire need for sound logistics companies, which will ensure smooth running of the e-retailers,” says Gaurav Issar, Co-Founder, JewelsNext.com, is an e-retailing website, which sells lifestyle jewellery from various brands, including Mehrasons, Cygnus Diamonds, Chawla Jewellers, Jeth Bhai Zaveri, etc.

WHAT works for e-commerce?

The supply chain of an e-commerce company is very different from the supply chain of corporate couriers. So, it is important to have a completely different team in a logistics company, which works specifically for e-commerce companies. Vineet Kanaujia, GM – Marketing, Safexpress, says, “Logistics is an extremely critical area for an e-commerce company and vice-versa. At Safexpress, in order to give the best of services, we have a dedicated workforce for this particular vertical as it requires a specific kind of mindset while dealing with customers.”

Lohia explains that the biggest difference is that of volume. Physical retail stores generally order large quantities and e-commerce companies order fewer quantities. The second difference is the lead time (the time between date of order and delivery date) – physical stores offer longer time frames whereas e-commerce companies offer very small time frames as their requirements are more urgent and come directly from the consumers. Another difference is the customer response, which can easily be monitored in case of online stores, but is tough to figure out in physical stores. “We can log on to the site and check the product response and demand for any particular product at any point of time in e-tailing companies, which comes very handy at the time of product development,” he adds.

“Even the best of logistics companies in India have not more than 40 per cent penetration across India. The need of the hour for e-retailers like us is to make a mark in tier II and tier III cities after serving the metros extensively,” says Hitendra Chaturvedi, CEO and Founder at RLC, parent company of GreenDust.com, an Indian vendor neutral reverse logistics company that offers customers and bulk buyers the option to purchase unused, branded factory seconds, surplus, overstock and refurbished products.

TAILORED FOR YOUR NEEDS

Understanding the needs of e-retailers, logistics companies are carving out special services for e-retailers. Talking about the same, Kanaujia says, “We see e-retail as a promising business vertical, which requires special services. So for them, we have specific services like express distribution, warehousing and inventory management.”

Under express distribution, Safexpress ensures that products are delivered on time even to the remotest of places, which means deliveries take place on timings put forth and also at a place best suitable for the customer. Warehousing and inventory management, on the other hand, ensure stocking and availability of products. According to Kanaujia, e-retail calls for micro-level complexities that need to be tackled with right micro-level management. For this, Safexpress holds trainings for its workforce. At present, these trainings are need based and in the future, looking at the prospects, the training will be held on a quarterly basis.

Logistics are sprucing up their services to keep pace with the fast pace of e-retail SCM.  Safexpress, in order to generate such revenues, plans to take steps like enhancing infrastructure for smaller deliveries, add smaller vehicles to its fleet, offer processes for odd hour and holiday deliveries, develop cash collection and deposit systems and set up real time order tracking system. Lohia Warehouse’s own system runs on a real time online software, which makes sharing and access of products very easy with other e-tailing companies. “We offer specialised services such as assortment creation for various product types, efficient packaging services for minimum damages and customisation of products according to the needs of e-commerce companies,”
says Lohia.

BRIGHT TIMES AHEAD

Along with logistics companies offering their special service to e-retailers, this new vertical has also had a positive effect on the logistics companies in terms of business. “E-retailers are offering logistics companies an opportunity to supply a large number of parcels everyday. On an average, 100-150 parcels are being supplied everyday, each coming in from 100-125 e-retailers. Also, with this growing number of parcels, logistics will be the largest employer in India in the next two years,” says Issar.

“Logistics are surely getting a boost from the e-retail business as it comes across as an interesting opportunity for them. These two businesses together are going to have a bright future, but the actual turning point would be when logistics invests heavily in the e-retail companies,” Chaturvedi adds.

Kanaujia, on the other hand, says, “E-retailing is at a nascent stage, where it is still evolving and the impact on our revenues is still very low. But looking at the pace at which it is growing, in the next three years, we would see that e-retail accounting for about 2-3% of our total revenues and of the logistics market as a whole.”

Any e-commerce company needs to have strong vendor relationships and a huge vendor base along with a good logistics network. Lohia comments, “An established sourcing company with proper infrastructural services can easily maintain the inventory levels, provide proper packaging services for delivery and the credit period for successful establishment and expansion of business. The entire thrust in e-commerce businesses is supply chain management and what would be better than to take advantage of a sourcing company? You get the ready assortment, inventory levels, effective pricing and packaging all at one place along with credit limit. We believe that e-commerce holds a strong future in India as internet broadband becomes a household phenomenon and e–retailers become more trustworthy and popular.”