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The changing face of logistics in Indian ecommerce space

Abhijeet Kumar, is a happy shopper and is all praises for e-tailers these days. His new found happiness has to do with the speed at which the stuff he buys online gets home. Sometimes it takes only 6- 8 hours to get home, says Kumar. While the 27 years old year old shopper knows very little about what happening behind the scenes, e-tailers, with a little help from fulfillment services companies, have been hard at work to fix their rear end i.e. the delivery infrastructure.

Changing for the better

Indian online retail industry has been scaling up and improving their product delivery, return pick-ups and shipment of wrong products to the consumers over the past two years. Helping them fix their backend, are fulfillment services companies. The landscape of the logistics and last mile fulfillment business for online retail has taken a leap forward from the traditional Courier and India Post model, to a combination of self fulfillment and Aggregated Shipping.

Multiple partners for more satisfaction

To overcome logistical issues, retailers and brands selling online have started working with multiple service providers, according to a report by Forrester. The report, titled Trends in Indian ecommerce market released earlier this month says that serving all parts of the country effectively can be quite daunting for etailers and hence they work with multiple partners. Following the lead from Flipkart, ecommerce players as well as start ups are realizing the need to reduce logistics spend and at the same time increase customer delight. However, the increase in volumes of etail shipments has made all logistics companies sit up and take notice of this opportunity.

Enter startups
Large logistics companies such as Bluedart, FedEx, Gati etc have launched dedicated services for online retailers. However, debut and rise of ecommerce focused logistic companies such as Chhotu, Mudita, unicommerce and Delhivery seem to be promising and can be the real game changer.

These companies offer solutions that address the various pain-points pertaining to supply chain of ecommerce companies, which traditional and big supply chain & logistic providers so far failed to do. Issues like last mile delivery, third party and transit warehousing, reverse logistics, offline payment collection have improved. However, Aadhar Aggarwal, co-founder, Chhotu.in points out that big and

traditional logistics companies lack alignment with ecommerce. For them ecommerce is a small side business whereas for us it is our bread and butter. This reflects in our processes, culture and technology, says Aggarwal. Entry of ecommerce specific logistics companies have addressed major pain-points of online retailers, for example cash remittance cycle has come down drastically, delivery time lines have improved, and return rate pertaining to COD has been curtailed significantly.

Delhivery, another startup focusing on ecommerce dedicated logistics and backend solutions offers multiple supply chain solutions. Besides last mile delivery it encompasses solutions such as third party and transit warehousing, vendor to warehouse and vendor to consumer shipping including customized logistics solutions. Noida based Unicommerce has recently launched its flagship product Uniware that offers realtime management of order fulfillment processes for ecommerce companies. With Uniware, etailers can manage end to end processes like procurement, goods receipt, quality assurances, pick and pack, invoicing, shipping, comprehensive return/replacements handling and inventory. To maintain exact and complete information of products in warehouse, Uniware assigns unique serial number (barcode) to every unit that enables etailers to track various details such as vendor, purchase date, product expiry and unit specification.

Mudita, a New Delhi based air cargo company has focused on the inter-city freight needs of online retailers, and offers flexible support to etailers. Mudita works as aggregator of freight for e-commerce and it offers reduced transit time for online retailers, without increasing costs for them. With multiple collections and connections as part of Muditas service offering, it focuses on back end support which ensures that order fulfillment time lines are reduced to the lowest possible.

The future?
Throwing light on future outlook of ecommerce logistics, Amit Gulati, Director, Mudita said

Over a short period, the challenges of Logistics which are amongst the major obstacles and pain areas for ecommerce companies will be overcome and an ecommerce focused Logistics environment will evolve, which allows great visibility and supply chain controls, while reducing the overall costs of operation.

Dealing with scale

Ecommerce specific logistics companies are good solution when an online retailer has little volume. However, when etailers attains considerable traction and it has to scale further, these companies may not be able to handle bigger scale. Speaking about the limitation of ecommerce dedicated logistics companies, Sandeep Aggarwal, Founder & CEO, Shopclues.com mentions

These companies are good solution when you have small or limited volume but in my view, these companies will have problem because they do all the stone breaking work for a small etailer and when he has scale, he is ready to move out from these providers.
Comparing the present standard of logistical infrastructure with matured markets of US and Western Europe, Aggarwal added The capability of logistics providers in India is at best 40 % upto the global standards. Unlike India, US and Western Europe saw a mail order revolution for 30 years before ecommerce came into being, he said. In India, before ecommerce, all the courier guys knew was either to move bulk shipment from one location to another or a document delivery for offices. The logistics guys have to go long way as their incapability serve as a hurdle for ecommerce ramp-up, he added.

http://yourstory.com/2012/08/value-chain-innovation-in-ecommerce/

Logistics: This part of the value chain is the biggest margin-eater for Indian E-tailing. US and China have supremely efficient logistics in place (despite their wider coverage) where some shipments even arrive before scheduled delivery date but are still not delivered to avoid future expectations of over-performance. While on the other hand, India lags well behind as we expand into the uncontested markets of the tier II and III cities. It is common knowledge now that some large companies even operate on a negative margin on deliveries in tier II cities. To add to this, courier companies cover only 30-40% of Indias zipcodes. Customer experience is egregious courier agents dont check with the customers availability, they lack training in dealing with returns, and their presentation fails to carry the brands image. All the above reasons point at a huge untapped potential. The logistics market alone is INR 300 Cr with a 33% growth-projections that makes it INR 600 Cr in less than 3 years. Players like Delhivery and Chhotu are getting their tier 1 cities mapped in entirety while Mudita and Holisol are honing their intercity performance. Tip: Logistics is an all or none market. The benefit of shifting to a newer Ecommerce specific service is justified only when all the zipcodes in an area are covered, else a company would rather opt in for volume discounts with a superior courier co. Some players have considered tie-ups with brick and mortar outlets to a hybrid model to reduce returns and that get into loops.

http://yourstory.com/2013/07/how-does-a-small-ecommerce-business-handle-logistics/

How does a small eCommerce business handle logistics?

We recently visited the office of DogSpot.in (an upcoming eCommerce portal based out of Gurgaon and backed by India Quotient) and learnt a lot about how a warehouse works for a small eCommerce store doing around 100 deliveries a day. Here, we asked them to tell us about how they handle their logistics. Many people call and ask us, who is your logistics partner? At DogSpot or at any eCommerce portal the answer will be 5-6 partners. The next obvious question is, Why So Many? The answer is that some logistics partners are very good on reach and coverage but will be high on cost. Others will be good on both but very poor on technical capabilities and service levels. This means that you will not be able to rely upon only one partner and will need a few contracts to sign up. Selection of logistics partner will depend upon following points:
1. 2. 3. 4. 5. 6. Reach: Serviceable PIN Codes Service Type: Surface, COD, Airway Service levels: Delivery SLAs Pricing: Per Half Kg Area Expertise Technical Capabilities

DogSpot has a system for selecting courier partner dispatching orders. Here is how we do it: Step 1- PIN Code Check: We look up shipping address PIN code with the list of PIN codes provided by our courier partners and we get a list of partners servicing the PIN code area. If no one is servicing the said PIN code, we route the packet through Indian Postal Services. Step 2- Rate Matrix Check: In this step our system allocates price of the logistics partners based on weight of the packet and the area. The most economic courier partner is chosen. Different logistics company have different pricing slabs per half a Kg weight and it varies with city and regions. If you make a table it will look like a matrix. Something like this:

Exception 1 (by Region): There are some regions in East India (like West Bengal, Assam, Mizoram, Manipur, Nagaland etc) where we need to select non-economic courier partner, since other courier partners fail in getting orders delivered in time. Exception 2 (by Weight): There are also some regions like (Delhi, Haryana, Punjab, Andhra Pradesh, Tamil Nadu, Kerala etc) where we can send heavy orders by surface mode which is more economical as compared with the Air mode. Exception 3 (by Reputation): Poor service provider is not selected

Step 3- Feed the System back: All logistics partners are rated on basis of achieving the SLAs. We feed it back as reputation score. Reputation score works on two parameters 1) we check on regular basis if the shipments are getting delivered on defined SLAs or not 2) Customer feedback Step 4- Automated alerts: Shipment which are not delivered and they are out of defined SLAs are listed in a report and emailed to concerned executives to follow up manually with logistics partners. This was a primer to how an eCommerce company chooses its logistic partners. How do you do it? If there are any other questions, do drop them in the comments About the author:

Rana Atheya, co-founder, Dogspot.in. He can be reached out @rana_vr1

http://www.medianama.com/2012/05/223-emerging-trends-in-indian-e-commerce-on-logistics-nopoach-payment-gateways-more/
Capabilities of logistics service providers are evolving

Logistics is where rubber meets the road, and ecommerce glamour meets the offline reality filled with dust, sweat and lost/wrong/delayed shipments. Some ecommerce specialist players now provide: - End-to-end ecommerce solutions, including inward, racking, picking, packing, shipping and collection. - Transparency into logistics companys processes through APIs, which can reduce returns (and costs) as well as bring predictability. - Variable warehousing bills (per order shipped) that help manage costs at lower scale, and a projection for reduction in per unit cost with increasing scale of the ecommerce business. There are several new and old companies worth calling out: a) Dedicated ecommerce divisions within traditional players like Bluedart, Aramex, etc b) New ecommerce logistics specialist such as Delhivery, Holisol and Chhotu. These companies and teams tend to be more hungry, innovative and nimble than their traditional counterparts but are still building their capabilities. Also interesting is Mudita for bulk inter city shipments.

http://www.nextbigwhat.com/logistics-for-ecommerce-in-india-297/

E-commerce logistics has grown only a few inches: Sanjiv Kathuria, Country Head, Dotzot
For ecommerce players in the country, logistics has been a major pain. Mass online retailers such as Flipkart and Jabong have their own logistics divisions. However, smaller companies struggle with multiple logistics providers.

Large logistics companies such as Bluedart, FedEx, Gati etc have had their dedicated services for online retailers. In addition, we have also seen rise of ecommerce focused logistic companies such as Chhotu, Mudita, unicommerce and Delhivery .

Latest to launch end to end logistics and warehousing service is DTDCs Dotzot. To understand more about Dotzots services, entry timing and status quo of ecommerce logistics in India, NextBigWhat spoke to Sanjiv Kathuria, Country head Dotzot. Edited excerpts of the interaction:

DTDC started now with Dotzot. What opportunities do you see? If we look at logistic scenario for ecommerce in India it has improved only few inches. Everybody talks about focused approach of mainstream logistic companies, but the real truth is that big logistic companies in India ships around 6-7 lakhs shipments everyday, out of which barely 2-3% orders (10 to 15K) are from ecommerce. So, how can logistic players focus on ecommerce? In terms of opportunities, well I said that space is in nascent stage and so is the opportunity. Dont you think DTDC is bit late in setting up dedicated service for ecommerce? We believe ecommerce logistics is in very nascent stage and our entry timing is perfect. Dotzots entry is not late at all, currently we are scratching the potential of logistics in ecommerce. We are born for ecommerce companies, and will service them only. We endeavored not to ship anything out of ecommerce via Dotzot, and that implies our focus for the segment. Tell us about Dotzots offering for online retailers in detail. Does Dotzot facilitate drop and reverse shipping?

Currently, we offer 6 services including Dotzot Express, Dotzot Economy, premium, returns and exchanges Collect on Delivery (COD) and warehousing.

With Dotzot Express feature, we offer fast, reliable, pan India door-to-door service across 8000+ pin codes spread over 2300 cities/towns. Importantly, Dotzot extends three delivery attempts sans any surcharge. On other hand, Dotzot Economy a slower and value for money service meant for larger/heavy parcels weighing more than 10 kg. The three delivery attempts without surcharge also available with the plan. Through Dotzots return and exchanges service etailers can have flexible return and exchange programs that are bundled with DotZot Express and Economy services.

With collection on Delivery (CoD) service, we solve the biggest pain of delay payment or struck cash flow(working capital). Our systems are designed to cater to this complexity, we collect value of the invoice at the time of delivery and remit it immediately by RTGS/ NEFT.

On warehousing front, Dotzot solution aims to optimize inventory, storage space, labor costs and time. We store inventory, pick and ship etailers product where and when they want it. It is basically on demand service, which manages etailers National Distribution Centre(NDC) or smaller Forward Stock Location ( FSl) to make their deliveries faster. What is the pricing structure across various offerings under Dotzots umbrella? Please elaborate.

Pricing depends on various factors such as volume, weight, geography and nature of the shipments. We have different pricing plans for metros, tier 2 and 3 cities

http://www.iamwire.com/2013/10/ecommerce-forms-leading-factor-growth-indias-logisticsindustry-cbre/

eCommerce forms a leading factor in the growth of Indias logistics industry: CBRE
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Despite of India facing weak economic scenario, the logistics and warehousing industry continued to witness growth during the first half of 2013 as per property consultant CBRE. The impact is said to be due to the growth in retail, eCommerce and manufacturing sectors. With eCommerce evolving at a rapid speed in India, logistics is becoming a key support factor in the success of both the existing and new entrants. Not only are the eTailers trying to increase their delivery speeds, but they are also trying different models to fulfill eCommerce orders effectively. For instance, recently Myntra galloping the 48 hours product delivery time, switched to one hour delivery for its customers in Delhi and Bangalore. Also Indian Logistics has seen an increase in the last mile delivery companies, which is led by entrepreneurs with no or low background of logistics, hence the industry is experiencing a lot of innovation. Delhivery for example is led by young entrepreneurs and is delivering great results in the last mile delivery sector. Considering logistics and e commerce as a lucrative sector, leading experienced professionals from logistics industry launched eComm Express two months back. This segment has given an increase in boost to the partnerships between eTailers and third party logistics, thereby attracting investments from major VCs and angels. The latest being the logistics Delhivery raising USD 5 Mn from Nexus Venture partners. As the Indian eCommerce exhibits signs of maturity, the major eCommerce companies have been seen putting aside large budgets to maintain their logistics and supply chains. Recently, Flipkart raised USD 160 Mn, making its total raised investments to USD 360 Mn. As said, a part of the sum raised will be utilized in developing technology and supply chain capabilities of the company.Thus giving a

glimpse of the importance, logistics make for a leading online marketplace of the country. As per Rahul sethi, Cofounder and CEO of Ladyblush.com, currently indian eCommerce industry is having a size of approx. USD 1 Bn and it competes with USD 150 Bn for China and bigger for US. In order to be in game, over the last 5 years, a significant amount of investments have gone in building technologies, processes, logistic capabilities, awareness, discounts and above all, inventories- to be able to provide desirable buyer experience and hence build affinity & acceptability towards the medium. However, it does not end here. With more than half of the online sales dependent on COD, maintaining logistics and delivery is quite a big challenge for the etailers. While COD is essential in a nascent eCommerce market, it can have a large negative impact on business margins, as the return rates can be quite high. As reported by Forrester, in India, the return rates can vary from 5% to more than 25%, depending on the category, the demographics of the online buyers, and their online tenure (experience with the Internet). Amid all these opportunity and challenges, the logistics segment in India continues to grow mutually with eCommece growth, and may be faster than eCommerce. The entrance of some major brands like Coca-Cola, IRCTC, Titan industries, etc depicts that the eCommerce is the future. Initiatives taken by Indian Post to enable eCommece show the belief of this country on future of ecommerce. And the size if investment gone in eCommerce, certainly shall push the entire support system, logistics being the first one. Iamwire strongly believe that logistics in this country was in poor shape, shearly because the big players did not seem to have believed that it is important to make investment when everyone can live with basic level of services, as the same companies were providing unmatchable services levels in other countries. But today, in the time of consumer centric retailing, with less and less loyalty, the pressure is being realized by all to do whatever and get to state of the art services levels for Indian Consumers also. With growing consumer awareness, expectations, and needs, all driven by Online media, India shall experience growth in all sectors linked to providing Indian people what they wish, and in the best way. To contact author, email at meha@wirefootindia.com
http://www.nextbigwhat.com/jabong-value-added-services-297/

Jabong Value Added Services is in 40 cities already, wants to take on traditional logistics players
Taking a leaf out of Amazons playbook, Jabong, the rocket Internet backed e-commerce portal launched third party logistics services Ja VAS a few days ago.

The company has already signed deals with more than 10 e-tailers including DoneByNone, YouShine, YepMe and several others to handle their logistics. We currently cover more than 1600 pin codes and plan to increase this number, Praveen Sinha, Managing Director and Co-founder of Jabong told NBW.

The fact that traditional logistics players have trouble in fulfilling the increasing demand has led to the rise of many last mile delivery startups such as chhotu.in and Delhivery. Amazon, the worlds largest online retailer is also expected to enter India in 2013.
Sinha says that e-commerce players find it difficult to work with existing logisitcs players because of slow cash-remittance. High return rates and slow pick up from customers are some of the other concerns, he added.

Logistics is one of the biggest concerns of online retailers as most of existing 3rd party logistics service providers werent originally designed for e-commerce. Shipping to all parts of the country can be quite daunting for small etailers and they usually work with multiple partners.

Ja VAS also includes warehousing services, end-mile delivery, reverse logistics, ERP nad IT consultancy for merchants. Presently, the service is in 40 cities and claims to have 70%-80% of the serviceable area in its network, which is close to serviceable area offered by big logistics players using their own network. We have developed the capability to handle the outbound logistics from multiple cities like Delhi, Mumbai and Bangalore, said Sinha who pointed out that the service will be cost competitive once etailer considers the total cost of delivery, which would include cost of returns, cost of working capital and cost incurred to mitigate inconsistent and below par service levels of competition.

Earlier in February 2012, Amazon had got government approval to set up its logistics service in India and the etailers full fledged entry in widely anticipated in 2013. In the US, Amazon offers its fulfillment services to 3rd party retailers across the country. This is a large part of the online retailing giants business.

http://knowledge.ckgsb.edu.cn/2013/06/24/china/logistics-revolution-in-china-will-deliverycompanies-deliver/
LOGISTICS REVOLUTION IN CHINA: WILL DELIVERY COMPANIES DELIVER? June 24, 2013 By Iris Mir 0 Comments An SF Express delivery truck in downtown Beijing Chinas logistics sector owes its rapid growth to the countrys e-commerce boom, but can it keep pace? Express delivery in China is cheap and fast. Buy something online and most likely youll have a kuaidi (Chinese word for courier) at your door step in just a day or two for a small delivery fee of as little as RMB 10 ($1.5). The country has more than 35,000 courier delivery companies that make this speedy delivery possible. They whiz through the cities on their three-wheeled electric trucks, and go door-to-door delivering parcels for a

slim profit. But having so many companies competing for such low margins has created a fiercely competitive logistics industry. The business model of most of these companies centers on delivering parcels, and very few venture on to other value-added services. Aiming at only being quick and cheapdoesnt leave much room or time for any other customer-friendly initiatives. T.L. Yip, Associate Director of Hong Kong-based C.Y. Tung International Centre for Maritime Studies, says, The market is so big that delivery companies have to sacrifice efficiency to meet the demand. And this comes at a price. In 2012 the Chinese postal authority cancelled the permits of 116 express delivery companies amid growing reports of customers complaining about losses, theft, poor handling of parcels and massive delays, especially during peak times. In 2011 the State Post Bureau received a whopping 366.1% more complains than the previous year! Half of them were due to delays in deliveries. This seriously affects e-commerce companies whose inability to control delivery may end up tarnishing their prospects of growth and affecting the loyalty of their customers. Alibaba, the worlds biggest business to business (B2B) online platform, is probably the one facing the biggest challenge. Its popular customer to customer (C2C) online marketplace Taobao receives more than 20 million orders a day (70% of Chinas deliveries). The parcels are delivered by third-party providers that have to deal with Chinas underdeveloped delivery infrastructure. This is a common problem the whole industry is facing, prompting other e-commerce players like Jingdong Mall (JD.com which was formerly known as 360buy.com), Suning and VANCL to invest in self-owned and managed logistics systems to ensure they are in control of the whole process. In contrast, Alibaba is not interested in owning its delivery network and since 2011 it has been lobbying for what it sees as a logistics revolution. In May this year, it announced the formation of a new company, Cainiao Network Technology. With Alibabas former CEO, Jack Ma, as the Chairman, Cainiao is an alliance of logistics companies, couriers and e-commerce companies such as Yintai Group, Alibaba Group and SFExpress, that are willing to collectively work for the development of a nationwide IT logistics platform. An Alibaba group spokesperson told CKGSB Knowledge that the company is spea rheading the project in cooperation with industry partners with a common goal of enhancing the existing logistics network, whether it be on the IT or physical delivery and warehousing levels. With a planned initial investment of $16.3 billion, the consortium marks a critical step in Alibabas vision of developing what it calls a China Smart Logistics Network within this decade. The ultimate aim is to solve a common problem that the company describes as a key industry bottleneck for e -commerce growth in China, the spokesperson says. Growing Fast, But Evolving Slowly Chinas logistics sector owes its rapid growth to the countrys e-commerce boom. The quick development created a huge business opportunity as delivery companies mushroomed. According to the State Post Bureau, in 2012 express delivery companies delivered 5.69 billion parcels, with an annual growth of 548%, creating revenues of RMB 105.53 billion. Of all these parcels, 60% came from online shopping, amounting to 38% of their total income, according to statistics from China Express and Logistics Consulting, a consultancy specializing in courier, express and postal services. Nevertheless, the sector failed to adjust itself to the rapid growth of e-commerce, something Cathy Roberson, Senior US Analyst at the UK-based Transport Intelligence, sees as the reason why the sector is lagging behind. So many logistics providers have jumped on to the stage They lack the adequate networks, such as warehousing or the appropriate delivery channels. They lack enough cars and trucks and they are all concentrating on the big cities, she adds. Nonetheless, the sector will continue to grow. In May, statistics presented at the China Express Delivery Industry Development Conference forecast that 8 billion parcels would be delivered in 2013, creating revenues of RMB 140 billion. The fragmentation of the logistics sector, however, poses serious challenges to e-tailers struggling to make customer experience their key value proposition. More importantly, as A.T. Kearney points out there is also a risk of logistics undermining the e-commerce industry unless e-commerce players take an active role to confront the issue. In a recent report titled Chinas e-commerce market: The Logistics Challenges, the global consultancy firm concludes that there is a clear gap in the market as no player offers the breadth of services needed at a competitive price across a broad network demanded by e-commerce companies. This issue will become even more pressing as e-tailers try to improve delivery times and increase their nationwide reach as the number of customers from third and fourth-tier-cities shopping

online increases. Filling the Gap VANCL, Chinas biggest fashion e -tailer, has user experience at the core of its business model. As part of the brands policy, all the goods can be returned and exchanged within 30 days. Items can be tried upon delivery; and if customers are not satisfied, they can return them to the same courier which delivered them. VANCL soon realised that not even one express delivery company was able to satisfy the promise they made to their clients. And so in 2008, just one year after its founding, they established their own home delivery subsidiary called Rufengda Express. Today logistics has become a key competitive advantage for VANCL. As Deng Bin, Deputy General Manager, Rufengda, explains, having a self-owned delivery network resulted in higher customer satisfaction. Our data shows us that 66% of buyers will come back to VANCL if the goods are delivered through Rufengda, whereas we will have only a 50% of returning customers if external companies were in charge of delivery, he adds. Jingdong has also experienced the benefits of having its own network. Thanks to its distribution centers in key cities like Beijing, Shanghai, Guangzhou and Chengdu, the company is now able to provide same-day or next-day delivery to the majority of users. According to the A.T. Kearney report, Jingdong Mall posted a 300% growth rate in the past five years after logistics bottlenecks forced the company to establish its own express delivery operations. Rufengdas Bin points out that theres an important difference between VANCL, a fashion e-tailer selling its own brand, and other B2C sites like Jingdong or Suning, that are selling third-party brands consumer products. Those companies main focus is on on-time delivery, while we focus on the services we provide to our customers. And the reason why we have a self-owned logistics system is because we focus on user experience, says Bin. Sou nd Logic vs. Exorbitant Costs While a selfowned logistics system may be a key differentiator, its not clear whether it will be a long -term solution, or an option suitable for all e-commerce platforms. In its 2012 review of online retailing in China, the Hong Kong-based Li & Fung Research Centre highlights that theres a concern among industry watchers about these online retailers lacking enough logistics knowhow, as well as a shortfall of e-logistics professionals. Furthermore, developing a self-owned logistics network entails a huge investment. And the issue about how these e-tailers already struggling to earn profits will manage to cover the costs still remains. This will get increasingly pronounced as the demand from inland cities rises and they need to invest in IT solutions to process a higher volume of orders and widen their delivery networks outreach. In the case of VANCL, for instance, they have warehouses in big cities like Beijing, Shanghai, Guangzhou, Chengdu, Wuhan and Xian. Rufengda has sub-branches in these cities too. But in smaller cities where the demand is still not so big, Rufengda operates through a hundred cooperative companies, and is thus unable to control the entire process. For the last decade courier companies focused on providing the cheapest delivery, igniting a price war that has been constantly keeping the industry from developing. Yip says that in the long run, for the sector to be sustainable express delivery companies must become cost leaders by lowering their operational costs and achieving standardization. They must be more efficient than competitors by providing the same services but at a lower cost while they specialize in their core businesses, he says. On the other hand, the standardization of the whole process will help Chinese e-commerce sites reduce logistics costs and stay competitive. Nowadays in the West logistics costs are about 5 -10% of the final product (cost), whereas in China they are of over the 10%, he adds. All in the Same Boat Only sophistication and specialization can ensure that Alibabas Taobao and Tmall platforms will function efficiently in the future. The company wants to be able to guarantee same-day delivery nationwide. And it believes this will be possible only if all the parties involved form partnerships and strategic alliances to actively participate in the development of a Modern 21st Century Logistics Network. Its an ambitious attempt. According to the company, over the next 5-10 years, the newly formed Cainiao will oversee the construction of a nationwide warehousing network that will cover a total area as large as 560 American football fields (3 million square meters approximately). Beijing, Tianjin, the Yangtze River Delta and the Pearl River Delta are some of the locations under consideration to build these logistics hubs. Since the project is conceived as an Open Logistics Platform, its partners, Taobao sellers and B2C websites can openly share facilities and all the logistics data. Alibaba has vowed that all industry members willing to work for this common goal are welcome to join the alliance. But the fact that Taobao will manage the whole process as the provider of a central supply chain is an issue

of concern among some industry watchers, who see the risk of the network becoming a monopoly that will give too much power to Alibaba. Rufengdas Bin doesnt see Alibabas Smart Logistics Network as competition and the two companies are actually discussing how they can cooperate with each other. Jack Ma is building a platform that doesnt have any value-added services, whereas we focus on operations, he explains. Long-Term Solution? Building a logistics network requires automation, innovation, investment in IT and also sufficiently trained staff, who should be able to provide value-added services to the network, says Roberson from Transport Intelligence. It is here that Bin says that Rufengda differs from the rest. He argues that Rufengda is not just a logistics or a courier companyit is a company which emphasizes on training and development, and the creation of a healthy corporate culture. This gives Rufengda an advantage as it tries to maintain its high quality standards and develop a costly infrastructure. To make their services profitable, in the long term they plan to use their expertise and reputation to offer customers and other private companies their knowledge in value-added services. Rufengda, for instance, already cooperates with Chinese companies like phone manufacturer Xiaomi and Ping An Insurance as well as multinational insurer Metlife, providing specific services like delivering contracts, and recording client signatures at their doorsteps, and sending them back to the company. In the future, Rufengda also plans to complement their basic services with other value-added services such as giving customers the option to use their point-of-sales (POS) machines to pay electricity, gas and water bills. Cainiao claims to be doing something new. It says that thanks to the data openly shared through its platform, the Smart Logistics Network will be able to process 10 times the current volumes of todays online purchases, worth RMB 30 billion. As for the future, its commitment is to keep innovating and learning. Trying to connect a national network that connects the North with the South and the West with the East is a huge undertaking; we dont know of any logistics provider who managed to do this yet, Roberson concludes.

http://www.iamwire.com/2013/03/comparison-of-independent-logistic-partners-in-india/

Comparison of independent logistic partners in India

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When you are doing an e-retail business in India, where the total serviceable pin codes are little over 25000, providing last mile free logistic is in itself a over commitment towards customers. And if you add that unimaginable cost towards reverse logistic (RTO), you will have a clear picture regarding one of the key reasons for bloodbath in e-commerce space. Whenever you search for review of any player be it new or old, one major problem that is equivocally stated is default on delivery time and state of package. Reputations and ROI on huge marketing expenditure are closely knitted with the Wow!! Factor that

you deliver to your customer. So the million dollar question is that on what parameters you will choose your shipping partner and how they perform on these parameters. COD and Prepaid Serviceability Top reasons stated by courier companies for RTO Average TAT by logistic partners for first delivery attempt

Figure 1: COD and Prepaid Serviceability COD and Prepaid Serviceability Once in a conference, I was listening to a prominent market leader stating the fact that orders from tier 2 and 3 cities are increasing at better rate when compared to metros. Major reasons stated were, the access to premium brands and authenticity of products. The question is do their logistic partners also share the same dream. Following bar graph shows the reach of major logistics partners (COD and PREPAID). Average and 85%ile time taken by logistic partners for first delivery attempt To benchmark the service quality of the different providers, we have compared average and 85%ile of the total time from dispatch to first delivery attempt. Clearly companies who have started as specialized ecommerce last mile delivery partners are doing significantly better over others. Companies like JAVAS, Chhotu have close to a day of average TAT for first delivery attempt and 2 days TAT for 85%ile numbers.

Figure 2: Average and 85%ile time taken by logistic partners for first delivery attempt The data supports the emergence of localized players and their commitment towards timely delivery. At the same time among the players with greater footprint in serviceability, Bluedart is a clear winner. Most of the orders served by them were on the customers doorstep by 5th day. Top reasons stated by courier companies for RTO Now we will take a look at other important component of this discussion RTO. Data shows that sometime people order items just for fun. This accounts for 45% of RTO. Now, here is a major grey area. Are people actually refusing to accept or my courier delivery guy never reached the address? This is tackled currently by different ecommerce player by cross checking RTOs. Some of them are doing random calls to customer, while others ask delivery boy to arrange a call between a refusing customer and the company executive.

Figure 3: Top reasons stated by courier companies for RTO Established players in market like flipkart, myntra, homeshop18 and many more have taken a strong stand against this problem by setting up their own delivery network. There is minimum basket size on which free home delivery is done and they monitor the performance for every delivery. But the bigger question is, are you ranking your logistic partner frequently and for each transaction? Dont you want to know who is a better partner when you are sending high value items via COD? Do you trust same partner with both fragile and bulkier goods? Answer to many of the questions asked above is automation of performance monitoring and courier allocation process to the extent possible through the use of technology. There are companies in the market who now provide technology to support such automations but an important evaluation criterion should be configurability of the product according to your operations and not vice versa.