India spends about 13% of its GDP on logistics: Kushal Nahata, FarEye

SAIF funded FarEye has recently launched delivery experience suite Delight. Delight aims to helps businesses to provide a seamless, personalized experience to the customers. The company was founded by Kushal Nahata in the year 2013 and its B2C logistics technology services are used by Walmart, DHL, Noon and Amway among other.

In a conversation with Indianretailer.com, Nahata says his company continues to grow at an astounding 362% year on year (Deloitte reports).

How much sales/revenue push your Delight can ensure to retailers/e-com players?

Historically, retailers were judged on the variety and pricing of products that they offered. However, with the boom in eCommerce, high adoption rates of digital technologies, the ‘Amazon Effect’ and rise in customer expectations, another parameter of superior delivery experience has become the key differentiator for brands.

With Delight, FarEye aims to save the$331 billion of revenue that is lost, solely due to poor customer service experienced by the customers globally. We enable retailers to provide a delightful delivery experience to consumers, thereby targeting the 88% of Indian customers who are likely to switch at least one company due to bad customer care experience.

The journey of parcel delivery contains multiple touch points with the customer, making it more complex to create a positive user experience for retailers. Each one of these interactions has the power to create loyal customers or to drive them away.

Delight enables retailers to create value with every touch point by offering Uber like tracking of the parcel, personalization of deliveries, ease of delivery date & location change and a seamless brand experience no matter which party is involved in making the delivery. This ensures brand loyalty, high customer retention for retailers and a personalized and delightful delivery experience for the end costumer. Higher customer retention leads to increase in profits ranging from 25-95% for even a 5% increase in retention.

Who will be benefited from Delight? What is the payment method?

FarEye works with global retail enterprises like Amway, Walmart and Noon to name a few. FarEye enables these organizations to offer innovative delivery models like parcel delivery, locker delivery, direct store delivery and more, to their customers. Our solutions and payment models are completely customizable as per the client’s needs and requirement.

How far the country has grown in this segment?

Logistics is a global challenge across manufacturing, retail & e-Commerce.

India spends about 13% of its GDP on logistics and it needs technology to reduce the cost of logistics and improve reliability in goods movement. Getting the spend down to 12% can save about 10 billion dollars. 

In the pre eCommerce era, logistics was largely a push-based system with suppliers pushing raw material to manufacturers, who in-turn distributed finished goods to end consumers via distributors and retailers. The demand was largely driven by a few verticals such as Pharma, FMCG, Auto and White goods, and they preferred to manage their own logistics or outsource it to regional Logistics Service Providers (LSPs).

Contrary to the traditional manufacturing supply-chains, eCommerce delivery gets triggered when customers places an order and is time sensitive. Logistics is a key enabler eCommerce and also a source of competitive advantage and differentiation for eCommerce companies.

India eCommerce has grown at an astounding pace over the last three years, touching a GMV of $15 billion and has given rise to a new category of eCommerce-focussed logistics companies. eCommerce logistics is a combination of one-to-one, many-to-one and one-to-many routing based on goods availability and destinations.

The logistics needs of eCommerce firms are evolving rapidly. This involves scaling up to meet the need for personalized deliveries (change of delivery location and time), increased focus on Tier-II and III cities and reverse logistics.

What are the challenges of e-com logistics in our country?

Major Challenges of eCommerce logistics in India:
 

Creating a superior customer experience

One of the most pressing needs of the eCommerce industry is that of creating a superior customer experience. Providing an exceptional eCommerce customer experience involves creating relevant, meaningful, and memorable events for customers leading to increased brand loyalty and positive brand favourability. E-commerce merchants can improve customer experience by leveraging the right delivery management and logistic solutions. The real challenge here is too many options available to the customer. The customer can switch loyalty with a single tap. To outdo other players in the market, eCommerce players need to break the clutter - where everything is at par and customer experience is the only differentiator.

Heavy costs incurred during last mile delivery:  As people continue to turn to eCommerce for shopping, companies are scrambling to cut costs of one of their biggest expenses: same day and last mile delivery.  Despite increasing deployment of technologies in the sector, the Indian e-tailing industry continues to face trouble on multiple metrics of supply chain health. 
Cost of reverse logistics Door-to-door delivery is as old as commerce itself. What is new is the expectation for faster and faster deliveries from the point of purchase. For companies looking to make a quick buck, reverse logistics is left in the shadows; but for companies on the long haul, robust reverse logistics is a necessary evil. Such companies now understand the complexities of reverse logistics in India. While conventional logistics deal with the processes and events used in bringing a product or resource to the customer, reverse logistics takes at least one backward step in the supply chain. The cost of reverse pickups poses another big challenge for eCommerce players.

What would be FarEye's expansion/investment plan for the next 5 years?

FarEye aims to target the USD 35 billion eCommerce retail logistics market in India. We expect to grow in line with the projected industry standard growth rate of 36%in the coming five years. After having a wide presence in the India, South East Asia and Middle East markets, FarEye aims to expand to newer geographies and enable retailers to solve region specific challenges.