The recurrent innovations happening in delivery mechanism of the eCommerce industry epitomises the level of changing consumer behaviour and expectations. Today a consumer wants everything on fingertips that too quick actually very quick! Betting on the stated facts, success of eCommerce firms today largely depends upon their delivery mechanism. Logistics industry has seen a significant boom over the 5 years and eCommerce has been the major catalyst behind it.
Retailer Media caught up with Rahul Mehra, CEO, AWL India Pvt. Ltd. to understand the importance of logistics and express delivery in eCommerce and how eRetailers are leveraging upon the same to lure larger consumer base.
Share with us some recent trends of eCommerce logistics and delivery mechanism?
The eCommerce industry has seen an unparalleled growth in the past few years. According to a report released by Merrill Lynch in 2015, it has been estimated that the eCommerce industry in India will be worth $220 billion by the year 2025. While logistics is the biggest challenge in e-tailing, it is also the key differentiator between ‘e-tailers.’ This industry is in the midst of emerging macro trends, and adapting logistics to accommodate these trends will determine any future success.
What are the major factors responsible for this sudden rise?
Largely there are 4 notable factors:
Rising investment in technology: A big trend in the logistics market is major investment in technology. Companies are implementing systems to help logistics service providers enhance delivery services and accurately monitor the movement of shipments, with shorter lead times.
Increasing relevance of Tier 2 and 3 cities necessitating a wider presence of logistics: The higher affordability of smartphones has given rise to more orders from Tier II and III cities.
A shift of focus to surface movement is creating a need to develop a strong multi-modal mix: E-tailers are moving to a managed marketplace model and have started expanding fulfillment center footprints across multiple locations to accommodate faster ground delivery and better customer service
Emergence of new categories increasing complexity: Categories such as apparel, baby products, sports goods and furniture (with different dimensions and volumes) have already added significant challenges to logistics. Besides capturing dead-weights and volumetric-weights, it is becoming all the more essential to develop accurate reconciliation systems and create transparency among sellers and e-tailers.
Being a logistics solution provider, what all it takes to deliver a seamless same day delivery experience to an online retailer?
Same-day delivery has the potential to fundamentally change the way we shop. It integrates the convenience of online retail with the immediacy of bricks-and-mortar stores. Demand is expected to increase significantly given the compelling value proposition of same-day delivery for consumers.
From the perspective of a logistics provider it is all about surviving and thriving in a world where instant gratification rules. To excel amid consumers’ rising expectations for on-demand fulfillment, retailers require a holistic supply chain strategy and Omni-channel fulfillment centres that turn same-day delivery challenges into competitive advantages.
How do you see consumer’s expectation changing when it comes to delivery?
Meeting customer expectations is more complicated than ever before: on-the-go, mobile shopping habits make consumers’ behavior unpredictable, while product variety and delivery options increase. Success of same day delivery services depends largely on location as same day delivery services are more feasible in densely populated areas as these shipments cannot go through regular hub and spoke delivery model because of compressed timeline. The type of product/shelf life is another major factor to be considered. It is very difficult to deliver certain large size products like home furnishing items on same day basis. Customer’s expectations about delivery time also vary depending on the product category. Food, grocery & flowers need faster delivery followed by apparels, electronics and other items
How technology plays a crucial part here?
New and emerging technologies have completely transformed the way we do business. With the fulfillment process timeline being compressed, companies are now looking at ways to reduce the time needed to fulfill an order and eliminate excess touch points and travel time in warehouse operations. New goods-to-person technologies such as shuttles, robotics, and automated sortation and retrieval systems are becoming increasingly commonplace as companies manage these demanding service levels.
With the cutting-edge technology now available, logistics companies are professionalizing a traditionally fragmented local delivery industry with real-time integration to their systems and downloadable mobile apps that literally put these tiny carriers on the map –in a managed network.
What are major challenges in the space?
The concept of same-day-delivery goes hand in hand with the very nature of the internet – fast, efficient, readily available. There are multiple lead time requirements based on the customers’ requirements. Other complexities include moving from pallet to piece pick at all levels of the supply chain. Complexity in deliveries - from few retailer addresses to numerous customer address; and add to it the high return flow. The challenge is to create an optimal network per product/ market combination.
One of the biggest challenges in the space remains….Location, Location, Location! And the good locations are never cheap. To meet the demand for tighter deliveries, logistics companies are looking to locate their distribution facilities near major metropolitan areas where real estate commands a premium. In order to remain competitive and turn a profit, maximizing the use of the vertical cube for greater storage capacity will become increasingly important.
Compression of the Order Fulfillment Process is another challenge which we face. With traditional fulfillment allowing a longer cutoff window to meet service levels, same-day shipping requires the pick-pack-ship process to be handled not in hours but literally minutes. Adding to this complexity is the nature of an eCommerce order which typically is comprised of individual SKUs versus full cases, resulting in labor-intensive and more difficult picking operations.
Where do you see the future of eCommerce logistics in the years to come?
Mobility is playing a key role in the end to process of eCommerce logistics. Applications Right from pickup to delivery (including delivery signature), tracking based on order number, customized delivery windows, integration with access points are playing a major in eCommerce logistics and the future will widely rely on such technological innovations. Smartphone evolution has already transformed the domain of logistics and is expected to play a pivotal role in future too.
Moreover, currently eCommerce orders are driven from major locations but as this industry would grow and the internet would expand in rural areas, there would be focus on rural delivery. This would pose another challenge in terms of network strength as well as cost of delivering at these remote locations.
I would like to add that in a market like ours (India) where people prefer to pay after getting the goods, COD services would play an important role. Another reason for preferring COD services would be limited usage of internet banking/credit card etc. in rural areas.