This is how eRetailers can cut logistics cost by 50%

While some players have also invested in building in-house logistics capabilities, the stark reality is that last mile fulfillment constitutes a majority (50-60%) of the total logistics expenditure.
Amit Sawhney, co-founder, Smartbox

India’s interest and curiosity in the eCommerce retail logistics is no more a secret to the world. Expected to grow at a CAGR of 52 per cent to touch USD36.7 billion by 2020, the eCommerce market is among India’s fastest-growing markets.

Logistics is a key enabler for growth of this industry and is increasingly evolving with growing business requirements. The logistics sector specific to eRetail in India is projected to witness a CAGR of ~48 per cent in the up-coming five years to reach USD2.2 billion by 2020.

While some players have also invested in building in-house logistics capabilities, the stark reality is that last mile fulfillment constitutes to a majority (50-60%) of the total logistics expenditure. In general, the eRetail companies or the logistics partners end up doing 25 to 30 deliveries per delivery agent in a day by making 30 to 35 attempts in a day.

On an average, 1.25 or 1.35 attempts are required to make one successful delivery. This is where Smartbox aims to bring a lot of efficiency. Projected as one stop solution for last-mile fulfillment related problems, Smartbox automated delivery terminals enable consumers with a highly secure, private, and convenient way to collect their online orders.

These terminals are present at 120 centres in Delhi NCR including metro stations, shopping centres, central locations etc. They are using cutting-edge technology and smart physical infrastructure to store, notify and track orders. Customers receive an OTP when the parcel is delivered at the terminal which that can be used to pick-up the order at a convenient time.

In words of Amit Sawhney, Co-founder and CEO of Smartbox, “With the eRetailers delivering to a smartbox terminal, the efficiency per delivery can be increased by ten folds. The agents making 25 to 30 deliveries per day can deliver 60 to 100 couriers, thus reducing the logistics cost.”

“The problems that we intend to solve are multiple, but the priority is last mile delivery challenges for the eCommerce companies,” he added.

Smartbox is an alternate option of delivery that solves multiple challenges for eCommerce retailers as well as the consumers and the logistics companies. So the efficiency increase that happens. If they have to pay for 250 deliveries, they have to incur the cost for 10 delivery agents.

“With smartbox, they can attain same numbers with just one delivery agent. Last mile delivery is the biggest chunk of the entire logistics and fulfillment process and 50 to 60 per cent of the total expenditure is dedicated to last mile delivery. And a 10 fold saving in that domain means a lot for the eRetailers,” asserted Sawhney.

Modulus Operandi

They get a delivery option which is available for them 24 hours a day. Couriers can’t be delivered to one’s house in midnight, but they can be delivered to a Smartbox which is in 50 to 100 meter radius to one’s house. This enables consumers to pick their delivery at a time convenient to them.

While zeroing on locations, Sawhney looks for two parameters – residential and commercial at locations wherever there is a lot of concentration and a lot of deliveries happening. Other than that, the firm is also installing the machines at Metro stations and other community places. COD – Card on Delivery is an option available with smartbox, but not Cash on delivery.

“As of now we are present in Delhi NCR, but we have signed up for locations in Bengaluru and Mumbai as well. In next phase, we will move to remaining metros and other cities,” briefs Sawhney.

The firm has already signed up with names such as Oriflame, ShopClues and HealthKart while discussions are on with the big ones.

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