India's eCommerce industry has taken the world of retail by storm and captured the creativity of an entire generation of entrepreneurs. Online retail represents a small fraction of eCommerce space which has become one of the fastest growing segments. In today’s world of online retail, logistics play a key role in defining the future of eCommerce players.
The changing face of eCommerce has a lot to do with the change in our mode of communication, that is, the rising need of smartphones and fast internet. The realm of competition has shifted from infinite variety of choices and sheer volumes to delivering to ever shortening delivery timelines.
Zero delivery prices, doorstep delivery and traceability solutions have become the most important elements of differentiation for providers. The essence of eRetailing model is to be able to transcend physical boundaries and reach customers in a manner different from the traditional brick and mortar stores, to their very doorstep.
Consumer behavior is changing. Immediate access to messaging, e-mail, media, and other online functionality through smartphones has generated a sense of entitlement to fast, simple, and efficient experiences. Whether it be the ease of scheduled deliveries or the corresponding reduction in time required, the study shows that the on-demand economy’s growth is a product of its alignment to consumers’ growing appetite for greater convenience, speed, and simplicity.
Keeping this in mind, the key to success in e -commerce industry is to ensure time bound deliveries while attaining agility in logistics chain. Fast delivery leads to customer satisfaction and more purchases. It is imperative in this industry to build a strong logistics network and up the game by making delivery of goods as convenient and fast as possible for its valued customers. The same-day shipping market has huge growth potential. However, consumers tend to avoid paying extra for same-day delivery service. According to industry reports more than 70 per cent of consumers don’t want to pay extra for overnight or same-day delivery.
Building a strong logistics chain in a developing economy like India, may act as the biggest barrier to the growth in eCommerce industry. The model developed in India targets the metropolitan and the Tier 1 cities where there is a mix of affluent and middle class where the internet is easily accessible.
It has been recorded that 90 per cent of the goods being ordered online are moved by air which increases the delivery costs to eRetailers. In this case, hybrid model works the best. The winners in this space will be those who have both bricks and clicks and not bricks or clicks alone.
The evolution of logistics landscape in India will be a crucial course for this industry. Despite a huge potential, long term profitability in the country is questionable. All the major eRetailers are yet to start making profits as the companies have wafer-thin margins and infrastructure which leads to high delivery costs.
The evolution of taxation policies in the country will affect the way in which industries practice warehousing. With uniformity in taxation laws, eRetailers are expected to move closer to consumption centers to address the duplicities by removing the overlaps in form of delivery. It will also result in uninterrupted access to e retailing market.
The battle for the online future of India is more intense than the one now being waged in eCommerce India is poised to be the world’s fastest-growing eCommerce market and is prized by America’s and China’s internet titans. As these companies jostle for market share, they are spending feverishly on logistics and discounts to lure consumers online. But whoever wins or loses in this frenzied contest, the importance of eCommerce stretches beyond individual firms and into the wider economy.
This article has been authored by Pratik Jindal, MD, SRS Grocery