E-commerce giants Amazon and Flipkart amid a small bump from the pandemic are now ramping up their warehousing and logistical operations with a sharp focus on smaller cities and towns, expecting an uptick in sales in the coming festive season.
The e-commerce sector witnessed a quicker rebound after the lockdown, along with higher demand from buyers and on-boarding of more sellers in tier-II and tier-III towns. This prompted e-commerce companies to take up larger warehouses in a multi-city expansion strategy.
Recently, Amazon India informed that it is all set to open 10 new fulfilment centres in new cities like Patna, with a high density of sellers, before the festive season sales in October and is also expanding some of its 50 odd existing centres.
Further, Udaan, a B2B e-commerce firm, which has nearly 10 million sq. ft of warehousing space, 60% of which is in tier II-III cities, has been looking at a mix or ready and built-to-suit warehouses.
“Udaan has been a big differentiator in solving problems for the long-term. We have expanded our warehousing capacity with a bottoms-up approach in terms of demand. In the next 2-3 years, the kind of space requirement we will drive will be huge and in varying formats.”~ Sujeet Kumar, co-founder, Udaan
Flipkart also have strategized a combination of urban, regional, and in-city storage facilities, taken on long-term and short-term leases.
“We are making significant efforts to bridge the gap between India and Bharat, and as smaller towns are witnessing high traction for e-commerce, we are expanding our supply chain accordingly,” said a Flipkart spokesperson
The sale events of the two major e-commerce giant of the nation in August helped them gauge demand that may be generated during the festive sale event. E-commerce firms are trying to ensure better infrastructure and technology, keeping social distancing in mind, to take care of a spike in demand before hitting the festive sales.
In the recent Prime Day sale, more than twice as many customers sign up for Prime membership than in the 2019 edition, and amazon revealed that over 65% of the new members came from outside of the top 10 cities.
“Since the lockdown, we saw a spike in customer orders and had to scale up our capacity to serve them across the country. Our fulfilment centres will serve higher demand for which technology scale-up is critical.”~ Akhil Saxena, VP, customer fulfilment operations, APAC, MENA & LATAM, Amazon India
Saxena said the company has made more than 100 changes operationally to deliver in terms of technology, processes, delivery and transportation.
Amazon is also enhancing sortation and transportation capacities. With daily cargo and passenger flights reduced, inventory placement has become critical where it is trying to place the inventory close to the customer.
“…With social distancing, there is a need to expand capacity and build more physical space so we can to receive and store inventory. We have to build more capability for ground transportation network and last mile delivery with partners third party carrier partners and we are working on a forecasting model as we prepare for the big day,” Saxena said.