Disrupting the last mile of E-commerce logistics in India
Disrupting the last mile of E-commerce logistics in India
The challenge
 
Inspite of increasing deployment of technologies over the last few years, the Indian e-tailing industry continues to face trouble on multiple metrics of supply chain health. For example, ~10-12% of all shipped items fail to reach the end customer, first attempt delivery strike rate remains a dismal 75% and last mile costs as a part of overall logistics costs are a high 45-50%, compared to 25-30% in more developed economies.
 
Not only do these challenges impact the customer experience, they have a major impact on the bottom-line of these already bleeding firms, with logistics costs adding up to more than 15-20% of their total cost outgo. The problem only gets compounded further during peak periods e.g. the October festive season, when the shipment count typically goes up 2-3x compared to the steady state.
The Amazon Solution- I Have Space (IHS)
Right from its initial days in India in 2014, Amazon has been experimenting with various supply chain initiatives to improve last mile performance and reduce cost, while delivering consumer convenience in the process. One of the key initiatives that emerged from these experiments was a pilot program of partnerships with Bharat Petroleum outlets, where Amazon customers could pick up their ordered goods from the petrol pump locations.
Over time, strong customer response saw this pilot program morph into a pan-India network of 9,000 strong Kirana stores, which not only facilitate package pick-ups by customers but also engage in delivering packages to customers at their doorsteps and processing customer returns. And thus the ‘I Have Space’ program was born.
 Services offered at IHS partner kirana stores
IHS associated Kirana stores act as extended arms of Amazon’s captive logistics company ATS (Amazon Transportation Services). Packages are delivered by ATS staff to the Kirana stores, the post which the Kirana stores take care of the item sorting, delivery/pick-up and order reconciliation. The stores not only offer their staff for deliveries, they also enable Amazon to augment its last mile storage space at locations close to the customer. Each ATS delivery centre is linked to 30-35 Kirana stores, which enables a 4,000 sq-ft delivery centre (for example) to augment its storage capacity by 20-25% by using the store’s storage facilities.
Financials - Amazon pays its Kirana stores based on the number of pick-ups processed and the number of delivery attempts made (INR 20-25 per delivery attempt in mid-2016), along with offering a fixed minimum guarantee of INR 2000-8000 per month, depending on the store. An average store can easily earn an additional revenue of more than INR 25,000 per month by associating with IHS program.
The success of the Amazon IHS program can be judged from the fact that the store count has grown from scratch to 9,000 (as of March 2017) in three years flat, with a more than 2x growth in store count over the last one year itself. ~28% of all Amazon deliveries are processed through these Kirana stores today.
Kirana store count and Amazon order share
Process Impact - In terms of process impact, the IHS program has played a significant role in solving key logistics challenges faced by Amazon:
Kirana Store Impact- RedSeer research with Kirana store owners1 indicates that they are highly positive about the program and strong growth in shipments processed through the program means that they remain committed to it. The program enables them to monetize their surplus manpower and storage space, thus enabling them to augment their revenues in a significant way each month.
Way forward
Amazon’s success with the IHS program motivated competitors, notably Flipkart, to launch a similar service last year. While not yet at the scale of Amazon, the service is also gaining traction and should see further expansion going forward.
Given the all-around benefits that the Kirana store program delivers for stakeholders, we expect that over the next few years, deliveries using such alternative channels would account for 40-50% of all e-tailer shipments. With the e-tailing industry poised to expand at least 4x in shipment terms by 2020 (RedSeer forecasts), this would lead to a manifold increase in the scale of such programs in the future, making possible a supply chain that is cost efficient and high performing and which delivers both customer and Kirana store partner delight.
 
  ( Source: RedSeer) 
 
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D2C Impact on Natural Skincare Sales: Exploring How Direct-To-Consumer Models Affect The Sales Of Natural Skincare, Emphasising Engagement
D2C Impact on Natural Skincare Sales: Exploring How Direct-To-Consumer Models Affect The Sales Of Natural Skincare, Emphasising Engagement
 

In the ever-changing landscape of the skincare industry, the rise of Direct-to-Consumer (D2C) models has been a transformative force, reshaping the way natural skincare products are sold and experienced. The fascinating world of  (D2C) marketing has had a profound impact on natural skincare sales, centered around the key element of customer engagement.

Lifting The Curtain: Enhanced Transparency: Transparency and sustainability have become critical for conscious consumers seeking for natural skincare solutions. D2C brands, equipped with the ability to communicate directly with their target audience, have the opportunity to showcase their meticulous sourcing practices, manufacturing ethics, and commitment to sustainability. This not only aligns with the values of environmentally conscious consumers but also develops a sense of trust and authenticity.

Tailoring Customer’s Skincare Journeys: D2C models build direct communication channels, allowing brands to offer their customers a personalized and customized experience. Through engaging interactions, brands gain insight into individual preferences, skin concerns, and feedback. This personal touch fosters a sense of connection, converting a transaction into a relationship. The skincare journey is transformed into a one-of-a-kind and personalized experience that resonates strongly with customers.

Building A Skincare Community: D2C brands thrive on community building, cultivating an environment where customers feel valued and connected. Exclusive benefits, early access to new products, special discounts, and loyalty rewards programs are the foundation of establishing a skincare community. This increases customer retention and also converts customers into brand advocates, which starts a chain reaction of positive word-of-mouth marketing.

Overcoming Geographical Barriers: Natural skincare brands that use direct-to-consumer methods are no longer constrained by traditional retail limitations. Brands can reach a broader audience, including those in remote areas, by moving beyond physical stores towards online platforms. The virtual shelf space has no boundaries, making it accessible to all those looking for high-quality natural skincare solutions.

Data-Driven Marketing:  In the age of analytics, direct-to-consumer brands use data to understand the nuances of customer preferences, behaviors, and purchasing patterns. This wealth of data is an extremely effective tool for targeted advertising and strategic marketing. Brands can create compelling campaigns that resonate with their customers and foster a deeper connection by acquiring a detailed understanding of their audience.

The Backbone of Brand Credibility: Trust is the backbone of successful direct-to-consumer natural skincare sales. Positive feedback, customer loyalty, and word-of-mouth recommendations increase a brand's credibility. When customers believe in the efficacy and quality of the products, trust increases. D2C models strengthen trust by promoting direct communication and community engagement, laying the foundation for long-term success.

The Online Advantage Offers Maximum Reach at Lower Prices: Online platforms and targeted marketing strategies enable D2C brands to reach a wide range of demographics and geographic locations. The low cost of online channels allows for maximum visibility, propelling brands into untapped markets and increasing market reach while eliminating the constraints of traditional retail overheads.

Real-Time Feedback Loops: Direct sales channels allow brands to create real-time feedback loops with their customers. This process of continual improvement enables brands to improve their products and services in response to community preferences and needs. The dialogue between brand and consumer grows into a dynamic collaboration, ensuring that skincare offerings evolve according to customer expectations.

Subscription Services: Subscription models are emerging as a strategic play for direct-to-consumer natural skincare brands. Brands can secure a steady stream of revenue by offering subscription services, as customers commit to receiving products regularly. This not only ensures consistent sales and cash flow but also strengthens the brand's relationship with its subscribers, ultimately leading to a loyal customer base.

Social Media Influence: Influencers have a significant influence on consumers in today's social media age. D2C natural skincare brands can tap into this power by collaborating with influencers who authentically represent their brand's values. User-generated content (UGC) which demonstrates real people using the brand's products is valuable social proof. Utilizing this content across social media platforms and the brand's website creates a compelling narrative that appeals to potential customers.

Conclusion: Direct-to-consumer (D2C) models have a significant impact on natural skincare sales. Enhanced transparency, personalized experiences, community building, increased accessibility, data-driven marketing, trust-building, online reach, feedback loops, subscription services, and social media influence all contribute to a shift in the way consumers perceive and interact with natural skincare brands. As brands navigate this transformative landscape, the key is to harness the power of direct-to-consumer models to not only sell products but also build long-term relationships with a community of skincare enthusiasts. The future of natural skincare sales is more than just a transaction; it's an immersive experience in which brands and consumers interact to create a narrative of beauty, authenticity, and sustainability.

 

Authored By

Himan

Himanshu Sharma, Co-founder & Managing Director, ORGATRE

 

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