Reaching Out!

We, Group 3, have been following the growth story of e-commerce firms in India since December 2014. We have spoken about almost each topic linked to e-commerce. It is no secret that the mobile & Internet revolutions have seeped into even the remotest parts of India. Even places that don’t have concrete buildings have access to the Internet. One of the topics not covered so far is reaching out to towns and villages by e-commerce firms. This includes distribution as well as payments. Surfing on the Internet is not as difficult as delivery of goods is. This is because logistics companies employed by e-commerce firms don’t have the resources and means to reach the further geographical locations of India as there are few or no effective last-mile delivery options. Also, usage of bank accounts is limited, therefore Cash-On-Delivery is the most preferred payment option. This raises the issue of collecting payments as well.

Hailed as the knight in shining armor, the Indian Postal services came swooping in to save the day. India Post is world’s most widely distributed postal system, meaning that they can reach the most inaccessible places in India with relatively less difficulty. They cater to areas encompassing 25,000 pin codes whereas the largest private courier service providers cover only 10,000 pin codes. As of March 2011, with 154,866 post offices all over the country and 466,903 employees, 90% of all post offices are in rural areas. On an average, a typical post office covers 21.23 square kms, and serves 7114 citizens. The whole nation-wide network of post offices is divided into 22 circles, thereby covering each and every nook and corner of the nation. Also, the Indian Post had witnessed a rapid decline in demand for services due to more technologically advanced modes of communication such as e-mail and mobile phones, resulting in lesser revenue. Therefore, a partnership between both entities would have substantial benefits for the two.

MoUs were signed and the partnership began. Snapdeal and Shopclues were the first ones to have partnered with India Post. Amazon and Alibaba have also partnered with the American and Chinese postal services respectively. Hence, there is no reason to believe that we cannot have a similar system in India. Soon, Flipkart & Amazon also joined the wagon and tied up with the Indian Post. As per government officials, the Indian post collected Rs. 280 crores cash in 12 months. Even though this is only a small chunk of what e-commerce firms make, it is significant because demand from non-metro areas is expected to rise. Eyeing the recent e-changes, Raghuram Rajan, RBI Governor has given the India Post a green signal for a banking license which means that doing COD transactions with the E-commerce portals will be further easy. The long severed public image of the India Post will get its big break by tying up with the e-commerce giants. This shows the effectiveness of the partnership. We hope this partnership fosters the e-commerce revolution and India’s development as well.

– Arushi Kotecha

Which Kart is Flip(Kart)?

(^^I hope you got the pun there!)

Hey, guys! We’ve all ordered something or the other from e-commerce biggies like Amazon, eBay, Flipkart (if not something else then, at least Debraj Ray). So whenever you’ve ordered something online, I’m sure you’ve waited eagerly for it to come, because I definitely have!

Today’s post is about the distribution channel of these e-commerce firms. Hope you like it! (Please comment if you do!)

THE DISTRIBUTION CHANNEL

To begin with, we need to know how e-commerce distribution system works.

In the early days of e-commerce, it was about the convenience of ordering a product from home. No driving to the mall and no waiting in line, just living life (except at NMIMS, maybe) and waiting for the package to be delivered to your doorstep. Shippers used snail mail (slow postal delivery) and phone calls to communicate with customers and order delivery times were in time periods of weeks, not days. Free shipping quickly became a tool that intensified competition, since there weren’t many carrier options and purchased items were only distributed via a postal, parcel or freight network.

In e-commerce lingo, an e-fulfillment center is a warehouse at which merchandise is stocked and picked at item level. Today, there are numerous e-fulfillment centers, which are operated by the retailer or a logistics service provider like eKart for Flipkart. A parcel hub center is where orders are sorted by zip or postal code, so they can be delivered to the relevant parcel delivery center for final delivery to the customer’s home or designated collection point. Parcel delivery centers handle the ‘last mile’ delivery to the customer. E-commerce poses the unique challenge of inventory arriving in bulk, but requires more care from then on – receiving bulk orders, then inventorying and picking those as individual products (there are robots that pick inventory and move it around the warehouse!).

Often, with dozens of suppliers, multiple warehouses, and an extensive number of sales channels, the chances of a misplaced order are much higher. Other than giants like Amazon, not many retailers have the resources to operate multiple distribution centers in strategic locations and instead are turning to third party logistics service providers to reach their customers. The evolution of multiple shipping options allows customers more control over the delivery process than ever before. Flipkart’s Delivery-In-A-Day & even on the next day are testament to this. It’s no longer about being the fastest rat in the e-commerce delivery race. Instead, it is about being able to deliver an order at a time frame and price point that customers want.

“Not very long ago, the e-tailing channel accounted for only about five per cent of industry sales. Thanks to these flash sales by e-commerce majors, their customer base has increased. According to our assessment, the e-tailing channel today constitutes 15-20 per cent of industry sales,” said Amit Chadha.

The next post will be uploaded soon.

– Simran Bhatia 🙂