At the heart of the evolution of the way one shops, and responsible for bringing a spin on the traditional marketing ways to crown customers at the top of the sale hierarchy, e-commerce, ever since its inception, has been a trendsetter in more than one way. Positively receptive to the changing ways of the world, the sector has never failed to innovate and exhibit its unique features and ways of operations including, reverse logistics, cross-border logistics, customer personalization, drone deliveries, and now Metaverse commerce. In this month’s cover story, we try to explore and cover the uniqueness of e-commerce logistics.
Indispensable for any business, e-commerce has become a huge force that transforms large & small, private & public, and for-profit & non-profit organizations. With several subsets, e-commerce is growing astronomically.
In 2021, India’s e-commerce market was valued at INR 84 billion and is projected to reach USD 200 billion by 2026. It has proved to be the easiest, quickest, and most efficient way to expand one’s geographical boundaries. Considering the low capital investment and lower hassles of overheads, more and more players are marching into the e-commerce arena and are doing significantly well. Changing times are roping in even those businesses that stayed hesitant to set foot in e-commerce, like many luxury brands.
“The focus has shifted from a price-sensitive model to a more value-add and experiential model. Overall, e-commerce has increased productivity for businesses and resulted in cost reduction which is passed on to consumers through promotions and discounts, creating value for both sides,” Harsh Shah, Co-founder at Fynd said.
Logistics as the backbone for ecommerce
Well intertwined with logistics, e-commerce involves operations from even before an order is placed till the last mile of delivery and then reverse logistics. It involves components of fluent order management systems, flawless inventory planning & management, smart stocking, efficient warehouse management, cost – efficient transportation, and value-added reverse logistics.
“Logistics plays an important role in today’s world, connecting both sides of companies – suppliers and buyers and delivering ordered products within the agreed time, without damage and with the lowest possible costs. That means without having a proper logistics solution in place, it is simply impossible to build an e-commerce brand,” Gaurav Gupta, Co-Founder, Shipway says.
Highlighting the significance of logistics in e-commerce, Saahil Goel, CEO & Co-founder of Shiprocket said “The pandemic has shed light on the significance of efficient, hasslefree logistics and has acted as a catalyst to fast-track the logistics sector’s growth as its pivotal role becomes increasingly apparent to e-commerce businesses.”
With logistics undoubtedly being an enabler for e-commerce to not only scale business but also enhance customer service, we ought to look into the uniqueness that the segment offers.
Innovation in different perspectives
Among the many, one uniqueness of e-commerce logistics is the ability to cater to its four different perspectives i.e. B2B – Business to Business, B2C – Business to Consumer, C2B – Consumer to Business, and C2C – Consumer to Consumer.
The rapid expansion that is being witnessed year on year in e-commerce, has made it quintessential for organizations to make rapid changes and adapt speedily to deliver satisfaction and efficiently meet the challenging demands thrown their way by each of the four e-commerce perspectives.
Dipanjan Banerjee, CBO, Ecom Express while explaining the different perspectives of e-commerce, says, “While C2B is a small segment, B2C is the largest segment of the home delivery ecosystem, then B2B and then C2C in decreasing order. The way to innovate in these segments primarily lies in determining who is receiving the package. If it is a customer, last mile innovations & technology are very different from what exists in a B2B space. Innovation and efficiency depend on the line of business you are catering to. There are synergies in the entire value chain, but every business requires a different kind of angle and cannot be clubbed together.”
Putting light on the innovative ways for e-commerce players to create efficient e-commerce fulfillment Mr Shah from Fynd mentions, “One is keeping inventory closer to the customers, like turning their retail stores into fulfillment points. Automation is the key to efficiency, so automated systems for inventory, order, and warehouse management are good ways to predict and meet the demand.”
He believes that one must make wise investments in efficient software solutions and reap the maximum benefits of automation. “It can help you get an edge by offering free shipping and reducing logistic costs. Acing the game of reverse logistics is yet another area,” he added.
3PL and D2C
Considering the said requirement, 3PLs are a great way to meet the swelling demands of well informed end-users as it makes management agile and can have a strong influence on companies’ overall performance.
“Since 3PL logistics takes care of the entire logistics function of a business, from inventory management to warehousing, order management, packaging, shipping, order tracking, and even reverse logistics, they cover all 4 perspectives,” says Mr Goel.
He adds, “3PL platforms enable sellers/ businesses to optimize costs, save time, stay updated with the latest technologies, increase efficiency, and enhance end customer satisfaction with no additional investment. Overall, outsourcing your logistics to a 3PL platform can allow sellers to focus on other aspects and their core product while shipping items to customers without delays or roadblocks, thereby driving business growth.”
Looking towards the current Indian market, brands are particularly more focused and increasingly turning towards alternative online selling channels beyond e-commerce marketplaces (like D2C and social commerce), to reach consumers. As per a report by KPMG, India currently has more than 800 D2C brands, with the area being roughly worth $44.6B in 2021 and projected to reach $100B by 2025.
“Despite the boom, the D2C sector needs to win over certain Logistics challenges that will enable the sector to run efficiently for a long period. This has put increased pressure on the supply chain, particularly the last mile aspect of it, and on manufacturing and human resources,” says Harshal Bhoi, Chief Business Officer, Xpressbees
Therefore, it requires fulfillment services beyond the captive logistics of the e-commerce marketplaces. 3PL plays a great role in having to help D2C operate seamlessly and keep up with the constant increase in demand and customer expectations.
“3PLs allow D2C companies to save time and effort spent on organizing and managing a supply chain by insourcing their logistics processes end-to-end. In the coming future, 3PL and D2C services are poised to grow and modify with emerging ‘smart’ working practices and mobile technologies. Accurate and efficient 3PL processes geared to decrease costs while providing 24/7 services will be crucial for D2Cs to adopt for future success. D2Cs can attain cost-reduction goals of operational and employee hours by partnering with 3PLs for global supply chain services,” says Alexandre Amine Soufiani, Managing Director & CEO, FM Logistics India
The Customer-First Approach
We live in an era where customers expect us to understand their wants and needs. Although understanding customer intent is one of the most complex pieces of the puzzle, personalization and shopper engagement have been the secret sauce of e-commerce logistics.
E-commerce logistics has very well drawn a parallel to offline retail and brought the personal touch of a sales person, who develops an understanding of the customers’ preferences, observing each aspect of their persona from the minute they walk into the store, and by starting a conversation to determine what they are looking to purchase, into the online retail by leveraging technology.
While the internet was the enabling technology for e-commerce logistics, it was not the only technology leveraged by the segment. Ketan Kulkarni, Chief Commercial Officer, Blue Dart, a logistics company that provides courier delivery services says, “At Blue Dart, customer centricity continues to be the bedrock of our foundation. Therefore, we are consistently on the lookout for tech-based solutions that help us deliver exceptional service quality at every touch point.”
The concept of hyper-personalization adopted by the segment is done by creating custom and targeted experiences through the use of data analytics, AI, and automation to send highly contextualized communications to specific customers at the right place and time, and through the right channel.
This is an abridged version of the original story that was published in the June edition of the Logistics Insider magazine. To read the complete article, Click here.