Future and Challenges for eTailing Logistics in India

Over the last two decades, rising internet and mobile phone penetration has changed the way we communicate and do business. E-commerce is no more a novel concept in India. There has been no doubt about the growth prospects of e-commerce in India. According to the Gurgaon-based consultancy Technopak, the $2.3-billion (Rs 13,800 crore) Indian eCommerce sector will touch $32 billion (Rs 1.92 lakh crore) by 2020. But for this to happen, the logistics sector - the link between eCommerce stores and customers must keep pace with the rate of growth in eCommerce.

At an e-tailing event in Gurgaon, the chief executive of a logistics company, while narrating his own experience, conveyed that during the festive season of Diwali, he was expecting the number of orders to double but, it went up by four to five times and led to a logjam.

Logistics startups are playing a critical role to help the logistics issue with the new e-tailers that are starting and help them during the peak seasons. There are various challenges for these logistics companies as the consumer behaviour in India is slightly different.

1. Tier 2 and Tier 3 cities will emerge as extended market and thus, it will lead to have a wider network to cater to the customers here. It is necessary to develop a network of branches and delivery points that will be able to service the high-growth cities.
2. Cash On Delivery need better cash handling capabilities. With higher volumes and customers looking for CoD, the companies not only have to effectively manage the cash but, handle it securely as it is not their money but, their clients. On top of that reconciliation issues and calculating the returns will add to the problems.
3. Delivery staff will be on high demand. Online marketplaces, etailers and logistics firms all will chase delivery boys to reach customers. The industry may face multiple pressures like high attrition and rising salaries. In addition to this, the industry has to look at the honesty and integrity of these staff as they will handle the products to deliver and more and more cash.
4. Reverse logistics is other big challenge to manage. It is not just the product that has to be carried back to the merchant but, cash as well if it is CoD.
5. Special and precious products will be added like medicines, jewellery etc. which will also be a challenge to the logistic industry. Such products may increase the requirement of special treatment and adds complexity.
6. Till now these logistics providers have tried to deliver locally by road. They also need to focus on other modes of transports like metro trains and other means to avoid traffic issues. While transporting from city to city there can be constraints for transportations through air as there may be container constraints and security issues.
7. Above all the different tax structure in different states will add up to the problem.

To cope up with these small with difficult challenges etailers needs to look at niche market areas which can give them high volumes. It will be difficult to find such business but, if you can then you have it. Also, in case you have a high margin business then that is the icing on the cake. These focused and high margins business will focus on high returns.

Here are few logistics companies which you can depend on. I suggest, have talks with all of them and sign-up with at least three of them so that you are ready when the flood comes and the deliveries are on time. Keep in mind that the sales of startups is mostly through word-of-mouth and an unhappy customer will tell hundreds of others but, a happy customer will tell to very few people.

Ecom Express: Launched in Jan 2013, they are making about 85,000 shipments a day. Claims to cover 207 cities and 2240 pin codes.
GoJavas: Launched around 2013, and their first client was Jabong - the online fashion and lifestyle etailer. Today it serves 200 companies and claims that it delivers to 2300 pin codes and covers about 105 cities.
Delhivery: Was started in April 2011 by Sahil Barua and two others who worked at Bain and Company, a consulting firm. Claims to cover 175 cities, 3600 pin codes and does about a lakh shipments a day.
eKart: It helps Flipkart with the deliveries.
Holisol Logistics: Started in 2009, offers warehouse consulting solutions. A year ago it expanded to deliveries. It is a single vendor for logistics, warehousing and fulfillment services for seamless flow of information. The company has set up a one-lakh-sq-ft warehouse for Jabong and a 1.6-lakh-sq-ft warehouse for FabFurnish at Jamalpur and Bilaspur in Gurgaon, respectively. The firm offers delivery services for e-taliers like Jabong and Freecultr and offline sellers like Raymond and Biba Apparels.

There are other courier companies as well which took the eCommerce and etailing industry lightly earlier.

Dotzot: Launched by DTDC in June 2013 with a delivery network of 8000 plus pin codes and 2300 cities.
Gati E-connect is another one which has also joined this logistics service. They claim to reach 5120 direct pin codes  and reach to 15,400 remote pin codes enabling to reach your business to the remote places.

Cash on Delivery seems here to stay, and the problems of that last-mile of delivery, and unreliable third party couriers will take at least a decade to resolve. In the meantime, the businesses that make it will either have huge margins on each order to cover the cost of these difficulties. It is very much important for startups and etailiers that the service which these logistics partner provides needs to be the best one at the price they can afford.

Such logistics companies should build algorithms using not only RFM (Recency, Frequency and Monetary values) but need to consider the distance as well. The use of technology is very important where in the deliveries need to be automatically allocated depending on the above factors and algorithm.

Happy know your thoughts and experience with the logistics partners. Feel free to share.

Engineering College Aims To Donate INR 10 Million for Kurnool Flood Relief

G. Pulla Reddy Engineering College, Kurnool, AP in India is the college where I completed my engineering. This is the college which broomed not only me but may such people to build their career. I owe the college, my teachers and staff a lot - because of them I am at this point of career.

Last month the town, Kurnool was submerged in water. The college alongwith the ex-students is co-ordinating to collect donations and extend the help to the needy in Kurnool and the near by towns and villages. The college aims to donate ten million rupees towards the relief for the flood victims of Kurnool and adjacent towns. The college popularly known as GPREC among the students and alumnae has launched a new website www.savekurnool.org to coordinate the donations.

More than 300 people died in the southern states of Andhra Pradesh and North Karnataka after the worst floods in years. Livestock and crops have been lost as well as numerous homes destroyed, leaving more than 200,000 people homeless and vulnerable to hunger and disease.
The move to have a website for the cause is to generate funds from the former students of the college who are residing outside India. This will help the NRIs to extend their bit for the cause.

The G. Pulla Reddy Trust has already donated one million hundred thousand rupees and the college management and staff have coordinated and donated five hundred eighty six thousands rupees towards the cause.

I request each one of you to extend their bit for this project to help the society. It is the time to give back to the society.

Google, Yahoo Set Up Websites For Elections

Google and Yahoo have launched special sites dedicated to coverage of the coming Lok Sabha elections starting April 16. Google estimates that 25 million of the 45 million internet users have attained the voting age and will actively look for election information and status online. Not only Google and Yahoo, the internet has emerged as a good media for people to discuss and debate about the coming elections which include social networking sites like Facebook and Orkut.

A tool on the site, called "Your Manifesto," also allows users to select issues of importance that let politicians know what interests them. "This feature will be of tremendous value for political parties, because it provides an insight into what is going on in the voters' minds," Krishna (VP for Emerging Markets, Yahoo India) said.

I guess the main intention of Google and Yahoo to come up with the sites for elections is only to build brand in the Indian community and to cash-on the advertising revenues. BJP is already put lot of investment in Adwords. Not only this, other political parties have also come up with their own websites. Few of them which I was able to gather are (not sure how many are official)-
http://www.aicc.org.in/, congress.org, manmohansingh.org, rajeev.in, lkadvani.in, bjp.org, prajarajyamparty.co.cc, narendramodi.in, telugudesam.org, soniagandhi.org

L K Advani a la Obama?

I do not have much interest in writing on politics or giving my opinion on the elections outcome. But, when I came across a banner of Shri LK Advani / BJP on one of the websites when I was browsing, I was intended to click on it and see what is in it. Next, it made me anxious to know his presence in online and social media.

Looking at the past there was no role of marketing or online strategies for the campaigns. And now, the advantages of leveraging social media and internet technology to connect directly with people has not gone unnoticed and the bug has bitten our political parties. The political leaders are trying to ride on the internet technology wave especially to connect with the 100 million first-time voters who would start voting from this general election. But, the way Obama leveraged the social media and networking for online campaign, I guess Advani is trying to follow the same foot-steps (I mean only in online and social networking strategies). I was suprised that the first adopter to this social media is not the young leader Rahul Gandhi or Sachin Pilot, but the 81 years old — Shri. LK Advani.

I have read in a news article that Advani’s team has started with a Web 2.0 and blog, and now his team is leveraging YouTube, Facebook, Orkut and Google Adwords to reach out to the young voter.

However, what remains to be seen is whether he can pull it off the way Obama managed. I just want to have your check on the stats which I got for one of the news article. (Source: RWW)

Facebook: Obama has more than 5.4 million supporters and 570,000 plus wall posts.
YouTube: Obama’s YouTube address garnered nearly a million views.
Twitter: Obama sent out more than 260 Tweets to 144,000 "followers”, updating supporters on his whereabouts.
Other Online tools: The “My Barack Obama” community beautifully used online tools to organize offline activities and generate donations.

In shortl, Obama’s managed to raise $600 million from 3 million people, mainly through small contributions made online.

If we look at the stats of Advani’s team (Source: My own findings. The above numbers can be inaccurate):

Google Adwords: Search on Google for the keywords – Rahul Gandhi, Sonia Gandhi, BJP, TDP, blog, elections, Narendra Modi, Manmohan Singh, Mayawati…may be more. You will see Advani’s ads linking it to his website or his blog. Suprisingly, they are not bidding on ‘Laloo Prasad Yadav’ as the keyword.
Website: His website is buzzing with activity. It has blog, discussion forum having more than 5000 posts, speeches and more. As soon as I went to the page there is welcome note from Advani (You need to have QuickTime plug-in to listen to it. The website does not has mp3 or mp4 audio). It has achieved an impressive Alexa ranking of 13,914 as on yesterday. A Google page rank of 4/10 for the home page. But no page rank yet for inner pages. The visitors traffic to the website is about 400,000 visitors in the last 30 days. Impressive numbers for a website to start with.
Blog: Has well written posts, but infrequent. The last post is dated February 1, 2009. And I see as on date, 122 comments posted here. I did not want to click and read the comments though.
Facebook:Has only 140+ supporters and not much activity happening.
Orkut: He has 531+ as supporters.
YouTube: His channel has 191+ videos and 82+ subscribers as of now.
Twitter: I read on one of the blog that Advani himself does not update the status but his support group does it. The profile used to say so. Ironically, this account was suspended on February 15, 2009 so I can’t provide the number of followers.

Nevertheless, a good beginning and I just imagine that many more Indian politicians engaging online with their voters in the near future. Also, I would love to chat with Laloo Prasad Yadav some time.

My question here is can Advani (or any political leader or party) gain similar support from Indian people who browse the web? Obama won the elections because he is Obama. By walking on the marketing tactics of Obama will not make Advani or anyone else the PM. Of course few net savvy guys may change their mind and vote for Advani, but the question will be how many? Next, Obama used the social networking for Americans. Advani is doing it for Indian audience.

Update on Mar 4, 2009: Oh God! After posting this on LK Advani, my whole blog is carrying his ads and banners. So, do click them and see what BJP has in store for us...