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http://www.nextbigwhat.com/logistics-in-indian-ecommerce-space-297/

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, arefulfillment 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
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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 offersreal-

time 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 aspart 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
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These companies are good solution when you have small or limited volumebut 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, hesaid.

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 theother 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

egregiouscourier 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 citiesmapped 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.
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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 (anupcoming eCommerce portal based out of

Gurgaon and backed by India Quotient)and learnt a lot abouthow a warehouse works for a

small eCommerce storedoing 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 somelogistics 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. Reach: Serviceable PIN Codes

2. Service Type: Surface, COD, Airway

3. Service levels: Delivery SLAs

4. Pricing: Per Half Kg

5. Area Expertise

6. 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:
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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 commentsAbout the author:
http://yourstory.in/2013/07/how-does-a-small-ecommerce-business-handle-logistics/dogspot2/http://yourstory.in/2013/07/how-does-a-small-ecommerce-business-handle-logistics/dogspot2/


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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-no-poach-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 asDelhivery,HolisolandChhotu.These companiesand teams tend to be more hungry, innovative and nimble than their traditional counterparts but

are still building their capabilities. Also interesting isMuditafor 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 .
http://www.dogspot.in/http://www.dogspot.in/http://www.dogspot.in/https://twitter.com/rana_vr1https://twitter.com/rana_vr1https://twitter.com/rana_vr1http://www.medianama.com/2012/05/223-emerging-trends-in-indian-e-commerce-on-logistics-no-poach-payment-gateways-more/http://www.medianama.com/2012/05/223-emerging-trends-in-indian-e-commerce-on-logistics-no-poach-payment-gateways-more/http://www.medianama.com/2012/05/223-emerging-trends-in-indian-e-commerce-on-logistics-no-poach-payment-gateways-more/http://www.delhivery.com/http://www.delhivery.com/http://www.delhivery.com/http://www.holisolindia.com/http://www.holisolindia.com/http://www.holisolindia.com/http://www.chhotu.in/http://www.chhotu.in/http://www.chhotu.in/http://www.muditacargo.com/http://www.muditacargo.com/http://www.muditacargo.com/http://www.nextbigwhat.com/logistics-for-ecommerce-in-india-297/http://www.nextbigwhat.com/logistics-for-ecommerce-in-india-297/http://www.nextbigwhat.com/logistics-for-ecommerce-in-india-297/http://www.muditacargo.com/http://www.chhotu.in/http://www.holisolindia.com/http://www.delhivery.com/http://www.medianama.com/2012/05/223-emerging-trends-in-indian-e-commerce-on-logistics-no-poach-payment-gateways-more/http://www.medianama.com/2012/05/223-emerging-trends-in-indian-e-commerce-on-logistics-no-poach-payment-gateways-more/https://twitter.com/rana_vr1http://www.dogspot.in/


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Latest to launch end to end logistics and warehousing service isDTDCs 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 Indiait 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.
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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-logistics-

industry-cbre/

eCommerce forms a leading factor in the growth of Indias

logistics industry: CBREinShare7

Despite of India facing weak economic scenario, the logistics and warehousingindustry continued to witness growth during the first half of 2013 as per propertyconsultant CBRE. The impact is said to be due to the growth in retail, eCommerceand manufacturing sectors.

With eCommerce evolving at a rapid speed in India, logistics is becoming a keysupport factor in the success of both the existing and new entrants. Not only are theeTailers trying to increase their delivery speeds, but they are also trying differentmodels to fulfill eCommerce orders effectively.

For instance, recently Myntra galloping the 48 hours product delivery time, switchedtoone hour deliveryfor its customers in Delhi and Bangalore. Also Indian Logisticshas seen an increase in the last mile delivery companies, which is led byentrepreneurs with no or low background of logistics, hence the industry isexperiencing 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 experiencedprofessionals from logistics industry launchedeComm Expresstwo months back.This segment has given an increase in boost to the partnerships between eTailersand third party logistics, thereby attracting investments from major VCs and angels.The latest being the logistics DelhiveryraisingUSD 5 Mn from Nexus Venturepartners.As the Indian eCommerce exhibits signs of maturity, the major eCommercecompanies have been seen putting aside large budgets to maintain their logisticsand supply chains. Recently, Flipkartraised USD 160 Mn, making its total raisedinvestments 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
http://www.iamwire.com/2013/10/ecommerce-forms-leading-factor-growth-indias-logistics-industry-cbre/http://www.iamwire.com/2013/10/ecommerce-forms-leading-factor-growth-indias-logistics-industry-cbre/http://www.iamwire.com/2013/10/ecommerce-forms-leading-factor-growth-indias-logistics-industry-cbre/http://www.iamwire.com/2013/08/snapdeal-enters-gifting-category-myntra-pilot-delivery-hour/http://www.iamwire.com/2013/08/snapdeal-enters-gifting-category-myntra-pilot-delivery-hour/http://www.iamwire.com/2013/04/leading-team-from-bluedart-starts-last-mile-delivery-firm-ropes-in-raman-gulati/http://www.iamwire.com/2013/04/leading-team-from-bluedart-starts-last-mile-delivery-firm-ropes-in-raman-gulati/http://www.iamwire.com/2013/04/leading-team-from-bluedart-starts-last-mile-delivery-firm-ropes-in-raman-gulati/http://www.iamwire.com/2013/09/mile-delivery-firm-delhivery-raises-usd-5mn-nexus-venture-partners/http://www.iamwire.com/2013/09/mile-delivery-firm-delhivery-raises-usd-5mn-nexus-venture-partners/http://www.iamwire.com/2013/09/mile-delivery-firm-delhivery-raises-usd-5mn-nexus-venture-partners/http://www.iamwire.com/2013/10/flipkart-breaks-records-latest-funding-closing-usd-360-mn/http://www.iamwire.com/2013/10/flipkart-breaks-records-latest-funding-closing-usd-360-mn/http://www.iamwire.com/2013/10/flipkart-breaks-records-latest-funding-closing-usd-360-mn/http://www.iamwire.com/2013/09/mile-delivery-firm-delhivery-raises-usd-5mn-nexus-venture-partners/http://www.iamwire.com/2013/04/leading-team-from-bluedart-starts-last-mile-delivery-firm-ropes-in-raman-gulati/http://www.iamwire.com/2013/08/snapdeal-enters-gifting-category-myntra-pilot-delivery-hour/http://www.iamwire.com/2013/10/ecommerce-forms-leading-factor-growth-indias-logistics-industry-cbre/http://www.iamwire.com/2013/10/ecommerce-forms-leading-factor-growth-indias-logistics-industry-cbre/


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glimpse of the importance, logistics make for a leading online marketplace of thecountry.As per Rahul sethi,Cofounder and CEO of Ladyblush.com, currently indianeCommerce industry is having a size of approx. USD 1 Bn and it competes with USD150 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 toprovide desirable buyer experience and hence build affinity & acceptability towardsthe medium.However, it does not end here. With more than half of the online sales dependent onCOD, maintaining logistics and delivery is quite a big challenge for the etailers. WhileCOD is essential in a nascent eCommerce market, it can have a large negativeimpact on business margins, as the return rates can be quite high. Asreported byForrester, in India, the return rates can vary from 5% to more than 25%, dependingon 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 togrow mutually with eCommece growth, and may be faster than eCommerce. Theentrance of some major brands like Coca-Cola, IRCTC, Titan industries, etc depictsthat the eCommerce is the future. Initiatives taken by Indian Post to enableeCommece show the belief of this country on future of ecommerce. And the size ifinvestment 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, shearlybecause 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 samecompanies were providing unmatchable services levels in other countries. But today,in the time of consumer centric retailing, with less and less loyalty, the pressure isbeing realized by all to do whatever and get to state of the art services levels forIndian Consumers also.

With growing consumer awareness, expectations, and needs, all driven by Onlinemedia, India shall experience growth in all sectors linked to providing Indian peoplewhat they wish, and in the best way.

To contact author, email at [email protected]

http://www.nextbigwhat.com/jabong-value-added-services-297/

Jabong Value Added Services is in 40 cities already, wants to take on traditionallogistics players

Taking a leaf out of Amazons playbook, Jabong, the rocket Internet backed e-commerce portal launched

third party logistics servicesJa VASa few days ago.
http://www.iamwire.com/2013/06/online-marketplace-one-of-the-most-overused-terms-in-indian-ecommerce/http://www.iamwire.com/2013/06/online-marketplace-one-of-the-most-overused-terms-in-indian-ecommerce/http://blogs.forrester.com/vikram_sehgal/13-06-10-indias_ecommerce_woes_managing_logistics_challenges_in_indiahttp://blogs.forrester.com/vikram_sehgal/13-06-10-indias_ecommerce_woes_managing_logistics_challenges_in_indiahttp://www.nextbigwhat.com/jabong-value-added-services-297/http://www.nextbigwhat.com/jabong-value-added-services-297/http://javas.in/http://javas.in/http://javas.in/http://javas.in/http://www.nextbigwhat.com/jabong-value-added-services-297/http://blogs.forrester.com/vikram_sehgal/13-06-10-indias_ecommerce_woes_managing_logistics_challenges_in_indiahttp://www.iamwire.com/2013/06/online-marketplace-one-of-the-most-overused-terms-in-indian-ecommerce/


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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 designedfor 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 gotgovernment approval to set up its logistics servicein India and

the etailers full fledged entry in widely anticipated in 2013. In the US, Amazon offers its fulfillmentservices 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-delivery-

companies-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
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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 quickand

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. Andthis 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 SF-

Express, 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 spearheading 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 commonproblem 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 orthe 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 andincrease their nationwide reach as the number of customers from third and fourth-tier-cities shopping


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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 betweenVANCL, 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. Sound Logic vs. Exorbitant Costs While a self-

owned 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 Onlysophistication 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 thefact that Taobao will manage the whole process as the provider of a central supply chain is an issue


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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 toprovide 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 India9

When you are doing an e-retail business in India,where the total serviceable pin codes are little over 25000, providing last mile freelogistic is in itself a over commitment towards customers. And if you add thatunimaginable cost towards reverse logistic (RTO), you will have a clear pictureregarding one of the key reasons for bloodbath in e-commerce space. Whenever yousearch 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 andROI on huge marketing expenditure are closely knitted with the Wow!! Factor that
http://www.iamwire.com/2013/03/comparison-of-independent-logistic-partners-in-india/http://www.iamwire.com/2013/03/comparison-of-independent-logistic-partners-in-india/http://www.iamwire.com/2013/03/comparison-of-independent-logistic-partners-in-india/logisticspartners/http://www.iamwire.com/2013/03/comparison-of-independent-logistic-partners-in-india/


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you deliver to your customer. So the million dollar question is that on whatparameters you will choose your shipping partner and how they perform on theseparameters. 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 ServiceabilityOnce in a conference, I was listening to a prominent market leader stating the factthat orders from tier 2 and 3 cities are increasing at better rate when compared tometros. Major reasons stated were, the access to premium brands and authenticityof 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 attemptTo benchmark the service quality of the different providers, we have comparedaverage and 85%ile of the total time from dispatch to first delivery attempt. Clearlycompanies who have started as specialized ecommerce last mile delivery partnersare doing significantly better over others. Companies like JAVAS, Chhotu haveclose to a day of average TAT for first delivery attempt and 2 days TAT for 85%ilenumbers.


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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 towardstimely delivery. At the same time among the players with greater footprint inserviceability, Bluedart is a clear winner. Most of the orders served by them were on

the customers doorstep by 5 thday.Top reasons stated by courier companies for RTONow we will take a look at other important component of this discussionRTO. Datashows 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 courierdelivery guy never reached the address? This is tackled currently by different e-commerce player by cross checking RTOs. Some of them are doing random calls tocustomer, while others ask delivery boy to arrange a call between a refusingcustomer and the company executive.

Figure 3: Top reasons stated by courier companies for RTO

Established players in market like flipkart, myntra, homeshop18 and many morehave taken a strong stand against this problem by setting up their own deliverynetwork. There is minimum basket size on which free home delivery is done andthey monitor the performance for every delivery. But the bigger question is, are youranking your logistic partner frequently and for each transaction? Dont you want toknow who is a better partner when you are sending high value items via COD? Doyou trust same partner with both fragile and bulkier goods?

Answer to many of the questions asked above is automation of performancemonitoring and courier allocation process to the extent possible through the use oftechnology. There are companies in the market who now provide technology tosupport such automations but an important evaluation criterion should beconfigurability of the product according to your operations and not vice versa.

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