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End of an era for e-commerce logistics aggregators?

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E-commerce has made life easy, by giving us access to anything and everything from around the globe in the comfort of our homes. But, as easy as it is for the customer, running an e-commerce firm might not be equally simple. The segment, currently running at its prime years in the nation, is expected to grow to US$ 350 billion by 2023, becoming the third-largest market in the world.

Managing large orders can be difficult and demands an e-commerce logistics aggregator.

Aggregators are essentially companies that are integrated with multiple carrier agents that an e-commerce firm can tie-up with. They provide a uniform and streamlined platform to monitor shipping orders and communication with multiple courier partners and deliver consumers with satisfaction and make e-commerce shipping easier and better.

Although aggregators provide a quick integration with specified courier partners, they might not be the perfect partner for large expansions, as growth requires targeted strikes on specific problems and that requires an independently built relationship with courier partners, which lacks when working with an aggregator.

But, does this means that this is the end of an era for the e-commerce logistics aggregator? We look at the current obstacle faced by the e-commerce logistics aggregators.

The inflation in fuel prices owing to the recent events has forced logistics companies to increase the shipping prices, this has resulted in a conflict between the large logistics companies and online logistics aggregators.

As per a media report, three of the largest e-Commerce-focussed logistics players – Delhivery, Ecom Express, and Xpressbees – simultaneously increased shipment prices for the aggregators, who asked the logistics companies to reconsider their decision and partially roll back the hikes.

Denying the request of an aggregator, the logistics companies have stuck with their hikes, after giving a grace period to some of the aggregators last month. With no relaxation from logistics companies, the aggregators are forced to increase prices for their customers, however, they are not imposing a uniform hike, the changes in pricing differ from client to client as they fear losing a large chunk of order volumes at one go. 

“There were several discussions following the rate hike from April 1. All three firms are sticking to the decision on pricing. Some of the bigger aggregators are going super-aggressive on pricing and approaching original clients of logistics firms has irked these companies, and thus there doesn’t seem to be much scope for negotiation,” an aggregator said. 

Aggregators are left with no choice, but they are still losing money on some orders that are being serviced at old rates. As per reports, the shipment charges were increased by as much as 35-40% for orders received via online logistics aggregators.

Some of the companies in this space are exploring a hybrid model in face of the ongoing conflict.

A few companies don’t own warehouses or build their delivery infrastructure. They aggregate orders and take them to companies like Delhivery, Ecom Express, and others. These platforms have gained traction by aggregating delivery orders from niche direct-to-consumer (D2C) brands, local businesses, and other small and medium businesses, while companies like Delhivery, Xpressbees, and others are dealing directly with enterprise clients with large shipment volumes.

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