Modern retail today is a global marketplace which streamlines transactions between manufacturers, producers (farmers), creators (Designers etc.), shopping platforms and consumers. An efficient logistics and supply chain is the key link connecting these stakeholders, facilitating the exponential boom in retail sector.
In India, the advent of E-commerce and FDI in retail was major factors that brought logistics in the spotlight, asretailers invested in their own infrastructure for setting up an efficient supply chain and logistics network. As per a report by KPMG, the Indian e-commerce retail sector is witnessing an upward growth trajectory with logistics seen as a key enabler. The e-commerce retail logistics market is valued at USD1.35 billion in 2018, and is projected to witness a growth of ~36 per cent in the coming five years.
The report further highlights that with this rapid growth of e-retail sector in India, traditional LSPs are trying to stay relevant by providing e-retail focused logistics solutions.As a result, most of these traditional LSP’s have bifurcated into separate B2B and B2C operation categories. Withexpert market insights, experience and set of strong network, these LSP’s have rapidly expanded to now account to roughly a quarter of the market share in the e-retail logistics.
However, e-retail players demand a different level of capabilities and service levels in order to cater to their customers. These limitationof technological capabilities of incumbent traditional third-party logistics (3PL) players have resulted in the riseof e-commerce focused LSPs who have entered the market by using a technology-centric approach. This has enabled e-retail players to scale up and remain efficient while still providing competitive prices to customers. The dedicated e-retail focussed LSP’s now account for roughly ~28 per cent of the sector while Individual players continue toexpand their operations, reach and capabilities. A large influx of investments instart-ups and strategic tie-ups with e-retailers have been witnessed in the past few years.
Today, as the mainstream logistics sector in India prepares to embracethe digital world and transform towards organised and structured processes, the organised logistics impact on Retail growth will be through:
- Just in time Delivery
With features that enable retailers to make informed choices when selecting a freight carrier to providing automated tracking updates, online logistics service providers are creating an ecosystem that drives assurance and trust. Further, the complete process of rate procurement to doorstep delivery, being facilitated on the online channel, gives the clients an added advantage of transparent dealings and regular updates. A single dashboard to track and manage multiple orders from around the globe helps clients get a real-time update on the progress of their shipment. Previously ambiguous costs like customs clearance and documentation etc., are also clearly stated, with adequate information regarding appropriate route of transportation, agreed service level optimisations and standardised, all inclusive rates, making the entire process transparent and reliable. Retailers are thus well assured of receiving their shipments on time, ensuring a smooth and positive service experience.
- Intelligent processes
Adopting the best of modern technology, new age logistics start-ups are transforming the traditional processes with intelligent, data driven methods. One such process is that of forecasting, which uses vital data of past shipments, like frequent destinations, frequently used sea or air freight forwarders, average delivery time, average weight/ volume of shipments, quantity, type of material, average costs per shipment etc., enabling businesses retailers to acquire customised costs and eliminate variability, with little to no scope of additional/ hidden charges. Further, this vital data is also useful to retailers to avail contract rates with frequently associated LSP’s, thus cutting logistics costs and driving profits
- Smart Consolidation
While logistics is a vital key to timely deliveries and to boost retail, it is also a key expense that can impact the end profits. Consolidation of shipments through centralised warehouses is a trend that is helping shape the organised logistics framework for Retailers. For example, the free flow of goods across the India can be leveraged to create a centralised hub for shipping to international destinations. Shipments from all over the country can be clubbed together basis their destination and shipped from a single port, thus creating an organised logistics system. Consolidation can help reduce shipment costs through bulk volume discounts, help cut down on other ancillary charges like customs fee and documentation charges (which could have been higher for individual shipments) and facilitate better order management and timely delivery.
- Reverse Logistics
The growth of e-commerce and the multi-channel model—which enables consumers to buy anytime, anywhere—has significantly impacted the retail industry. This has given rise to reverse logistics–the flow of goods and products from the point of consumption to point of origin, for purpose of recapturing value or for proper disposal. When a manufacturer’s product normally moves through the supply chain network, it is to reach the distributor or customer. Any process or management after the sale of the product involves reverse logistics. From a logistics and supply chain point of view, Reverse logistics presents one of the biggest operational challenges in the world of eCommerce freight logistics, due to the sheer volume and cost of processing returns. However, if handled effectively by organised logistics providers, reverse logistics can result in direct benefits, including improved customer satisfaction, decreased resource investment levels, and reductions in storage and distribution costs.
Retail, from luxury to e-commerce, is an extremely price sensitive business. Logistics, when utilised smartly, can prove to be a key factor impacting profits. Streamlining the process through the help of experienced online logistic marketplaces can not only ease the burden of planning, supervision and management but also helpsto dramatically control costs, thus add to revenue growth through well planned and efficient functioning.
The article has been penned down by Ruchi Dogra, Co-Founder & Director, FreightCrate Technologies