As e-retail hots up, here is how logistics firms are getting ready to take up the challenge

Will it be the next big idea that will propel online players to claim their USPs in the e-commerce space, that they can offer quick service to consumers through same-day deliveries?

Almost all the online players, be it in retail, electronics or food, are aiming to improve their delivery system and offerings with an eye on raking in the consumers and the money that follows.

Last month, a Mumbai-based pizza delivery company, Pizzeria, went to the unimaginable length, not seen in India yet, of using drones to deliver pizzas. Commercial deliveries by drones are not allowed in India and are mainly used by film makers here to shoot films. However, unique experiments such as these stoke the belief that delivery is going to be one of the factors that will be the differentiator for online companies where customers are concerned.

At least three online companies-Flipkart, Amazon and Snapdeal-piloted same-day delivery service, according to which if a buyer places an order before 12 noon, the item will be delivered the same day, not gratis, but at a fee of around Rs 150.

“We are running a pilot on same-day delivery for our customers in Mumbai. This is a step further in our effort to deliver products to our customers in a quick and reliable manner,” said an Amazon India spokesperson. Depending on the feedback to the service, a call will be taken on how to process it further, the spokesperson added.

Along with Amazon, Flipkart and Snapdeal have also started same-day delivery service in 10 and 15 cities, respectively. The pilot has been launched first in the four metro cities along with a few neighbouring places like Navi Mumbai, Noida, Gurgaon, etc.

Sanjiv Kathuria, CEO, DotZot, a Delhi-based logistics company says this service will be used as an add-on service. “It is a good option for people who require this service once in a while. I don’t think people are going to use it very often,” Kathuria said. Trends and surveys, however, show people still want home deliveries free of cost, he added.

While Snapdeal declined to comment, Flipkart and Amazon did not give any details on the number of same-day delivery requests they receive on a daily or monthly basis.

“Being a fairly new service, we do not want to immediately comment on these numbers. However, the demand for such a service is quite high, as is evident from the numbers we are seeing for our six-month old Next Day Guarantee Delivery. In certain categories, these account for almost 35 percent of total orders in that category,” said Rahul Chari, VP - Engineering (Supply-Chain), Flipkart.

Making it happen

A service of this scale calls for streamlining supply-chain at various places, Chari said. “It requires high level of supply-chain efficiencies - from mapping a customer’s pincode to the location of the product, taking into account delivery times and past record of our delivery partners,” Chari said. “This is one of the reason why this service is currently only offered by our logistics partner-cutting down on any uncertainties with respect to last-mile bottlenecks,” he added.

Saurabh Uboweja, CEO, Brands of Desire, a Delhi-based brand consultancy firm, points out that the biggest deterrent to same-day delivery is the marketplace model, which is gaining more prominence now and comes with its own set of uncertainties. “It simply means there has to be more investments in quality assurance of products being delivered. This will ensure that same-day delivery model doesn’t reach its expected scale,” he said.

However, B Hari, Partner, Indian Angel Network, says typically till now logistics companies were used to dealing with either businesses directly or individual clients. “But while working with e-retailers they have to meet third-party sellers (in case of a marketplace model) and co-ordinate with them to pick up and then deliver. Handling cash-on-delivery is one of the other challenges logistics companies face who offer deliveries only to online retailers,” Hari said.

Logistics arm

Sahil Barua, Co-Founder, Delhivery, a Delhi-based logistics firm says, his online partners have the freedom to channel their orders from any number of sub-sellers they have on-board. Delhivery will integrate and take care of all the deliveries from all such merchants. He claims that after picking up the goods, Delhivery can deliver them in a short span of 12 hours.

Started in 2011 and backed by Times Internet, Delhivery had raised $5 million from Nexus Venture Partners in 2013. It claims to be present in more than 100 cities and covers around 2,200 pincodes.

According to Hari of Indian Angel Network, the new players have simpler and much smarter solutions, with everything automated and streamlined.

“Delhivery has built out technology algorithms to optimize deliveries (minimize returns, etc), at lowest cost. It is a technology and analytics company as much as it is a logistics company,” said Suvir Sujan, Co-Founder and Managing Director, Nexus Venture Partners.

He says making successful COD (cash on delivery) deliveries is still a challenge for both-the logistics and online retailers. “Same-day delivery will co-exist with normal delivery. Consumers who want express shipments can pay for that service.”