The backbone of the online retail industry is the logistics providers. Since they provide the service of transporting and distributing your products to your customers, thereby completing the sale process, you have to be very careful in delegating this responsibility.
Firstly, we think that it is crucial for a growing e-commerce business to subscribe to the services of a courier and logistics provider. Doing so saves time and effort, and someone to share the responsibility of delivery along with you.
In India, we have a lot of choices when it comes to logistics providers, from small regional operations to international brands. Create a detailed selection process for your needs, where you compare the pros and cons that would include area of operations, cost, pickup facilities and tracking.
Reverse logistics is another important area you should look into before deciding. Look at it as a long-term commitment, because changing logistics providers can be a difficult transition.
Here is a list of providers you could consider.
Selected Pan-India Logistics Providers
Blue Dartis a trusted name in the industry, and they are known for their timely deliveries and extensive area of operations. Apart from this, they offer arange of comprehensive tracking toolsspecifically for e-commerce businesses that includes tracking via internet and mobile phones on a real time basis. Although they are a tad bit more expensive than your average logistics provider, the price comes with quality.
Last May, DTDC came up withDotzot, a specialized logistics service for e-commerce providers in India. While big players like Flipkart and Jabong have their own delivery services, this was great news for independent online retail providers. Dotzot offersthree types of services– express, economy and premium, depending upon your needs.
Another trusted name in the business,Aramexoffers a few specific services for e-commerce providers. It helps you through shipping and delivery, supply chain management and offers technical support. Although not known for its deliverable area, Aramex is one option that you can explore.
The new kid on the block,Delhiveryis alreadymaking waves in the business. Delhivery offers a comprehensive service that is catered for omni-channel retailers, whether regional or national, business intelligence tools for logistics and order fulfillment. In terms of pricing, Delhivery is comfortably perched between the more expensive players like Blue Dart and FedEx and the smaller, regional providers.
Ecom Expressis another newbie in the scene, competing in the online retail-dedicated logistics market with Delhivery, Dotzot and the like. Founded last year by a few former top executives at Blue Dart, Ecom Express has been growing at a fast pace. Tailored for small and medium sized e-retail businesses, Ecom Express offers awide range of services– including pre-paid, cash-on-delivery, cash-before-delivery, etc.
Online fashion etailerJabonghas reason to smile.Investors Rocket Internet and AB Kinnevik have given a $ 339 millionto its investee Global Fashion Group (GFG), of which Jabong is a part. However, the latest developments put GFG’s valuation at $1.13 billion, a devaluation of nearly 68% in a year’s time.
Romain Voog, CEO of GFG said,
“The financing will provide GFG with the necessary capital to continue to execute its strategy of building out its leading position in the online fashion sector in emerging markets.”
Oliver Samwer,CEO of Rocket Internet, said,
“As part of the transaction, Rocket Internet has agreed to underwrite up to €100 million of the Financing. Rocket Internet expects to invest up to €85 million including the conversion of an existing investment at the terms of the Financing.”
Jabong and its tough days
Jabong has always been sort of an unloved child. The companyjoined the GFGin April 2015. Shortly after (October 2015),GFG was in talks with Snapdealto sell off the company. Then came the news that the company had had a good run in January 2016, and was hoping tobreak even soon. However, the company was still seeking out buyers. Kishore Biyani’sFuture Group bought FabFurnishfrom Rocket Internet, but declined to buy sister concern Jabong. The company laterbrought down its asking price, but still no one expressed interest in buying it.
Experts also feel that investors will begin to keep a close watch on companies’ key metrics.Says Ashvin Vellody, partner in ecommerce and start-ups at KPMG,
“At this stage, the stakeholder expectation for companies that have been around for a few years is to show strong operational discipline and a clear path to profitability.”
Jabong is not the only one to face devaluation. In the past,Morgan Stanley devalued Flipkart,Snapdeal’s investors pulled out, and companies have been unable to reach their targeted GMVs. Ecommerce is in a tough spot, but it might well be the pains associated with growth. Economic theory states that a plateau has to be crossed before the peak.
Ecommerce leaders are treading cautiously before announcing any sale events. Reason? They don’t want to penalized for breaking any rules that came into effect after100% FDI policy.
Sources revealed thatFlipkart called offits May app-only sale.Snapdealand Amazontoo have cancelled their upcoming discount events.
A person aware of this developmentdisclosed,
“E-commerce marketplaces don’t want to attract the ire of regulators and offline retailers right now. The government has just announced new regulations and it will be very embarrassing for them if online retailers continue as if nothing has happened. So, to avoid angering the regulators, Flipkart, Amazon and Snapdeal have put sales and advertising of sales events on hold. Now, the most important thing for them is to be ready with sales for the festive season.”
Pulling plug on discounts
As per the latest FDI directive,
Etailers can’t directly or indirectly influence product prices
25% cap on sales from a single seller
The above two conditions prohibits online marketplaces from offering huge discountsand sponsoring big sale events, which they are so used to doing. Those who refuse to comply, DIPP’s warningis clear,
“If you violate the conditions, you run the risk of (falling foul of the law). We will take care of how to deal with it.”
Therefore,Flipkart,SnapdealandAmazonhave decided that until they figure out a way,sales will have to wait.
The decision to keep sales on hold is a temporary one. Discounts and online shopping go hand-in-hand. A festive season without lucrative deals is incomplete. Therefore, discountswon’t stopbut etailersneed timeto restructure their business.
The main concern is to be ready before 2016’s festive season kicks in.
Angshuman Bhattacharya, MD at Alvarez and Marsal India explained how ecommerce biggies are trying to find a way to offer volume discounts without landing in a legal soup. Heelucidated,
“E-commerce marketplaces are trying to understand their position with DIPP (department of industrial policy and promotion). They want to take a safe position for now and eventually emerge with mechanisms where they can provide incentives to the customers. Days of discounting are not over but these firms are definitely vetting out their legal positions when it comes to discounts.”
Time to find new ways?
The whole point of this new directive is to discourage mindless discounts and create a profitable retail environment for both, offline and online players. Agreed, the retail industry can’t survive without the occasional & seasonal offers. However, making it a normdoesn’t benefitanyone.
Ecommerce companies have been saying for a long time thatdiscount-driven modelisn’t practical and it needs to go.Losses running in thousands of croresare a result of spending precious funds on deals.
The latest score calculations put Amazon in Snapdeal’s second place. While Flipkart is still sitting pretty in its number one spot, butmarketplace experts believe this will soon change. Amazon is picking up pace and stepping around Flipkart’s mistakes. Allowing them to catch up even faster! The industry estimates reveal that according to last month’s shipments Amazon is the country’s second largest online marketplace.
The Proof is in the Numbers!
Amazon was the only major online marketplace that saw an increase in its shipment share from a year ago.As per estimatesfrom an investor tracking the logistics market and according to the chief executive officer of a logistics firm, handling online retail shipments:
First Place –Flipkart’s market share fell from 43% to 37% (in March)
Second Place –Amazon’s market share rose from 14% to an estimated 21-24%
Third Place –Snapdeal’s market share dropped from 19% to 14-15%
Despite these figures, a recent estimate shows Flipkart and Snapdeal are ahead of Amazon India in terms of sales. However,a senior analyst at Forrester Research, Satish Meena said,
“Amazon is very rapidly taking market share from companies like Snapdeal and other smaller players. If there is no new entry, it will be a two-horse race (between Flipkart and Amazon) by the end of the year.”
“If Flipkart is not able to get its act together in the next 6-12 months, Amazon can overtake Flipkart also.”
US based financial service company, Morgan Stanley estimates Indian online retail (with food and grocery deliver) will be worth $119 in 2020. Big time etailers like Flipkart, Myntra and Snapdeal are dreaming of GMV growthbutAmazon seems to think differently. Amazon has not disclosed any sales target like Flipkart’s$16 billion targetfrom 2015.
Signs of Amazon’s Domination
Theincrease in Amazon’s market shareis a sign that the multinational online marketplace could dominate Indian ecommerce some day. An average of 8-9 lakh products were shipped in a day in March 2016. Out of this figure, three-fourth shipments belonged to Flipkart, Amazon and Snapdeal. The next ranks belong to Shopclues and Paytm, indicate estimates.
Amazon isstill aggressively investing in India, said Amazon India’s MD Amit Agarwal. The marketplace is committed to pump $2 billion into its branch in India. On the flipside marketplaces Snapdeal and Flipkart are being forced tocut down discounts and lavish spending. Out of the crores Amazon has infused into its Indian branch, a good portion of it is directed towards improving consumer’s shopping experience through delivery, after sales services and the introduction of a prime subscription program.
New ecommerce regulationsfrom the Indian government have put a strain on marketplace activities. However, Amazon won’t let it get in the way. In fact,the marketplace wants to comply with the ruleso its sellers can benefit along with its consumers.
Amazon vs. Flipkart – Who will be Victorious?
Back in February,Morgan Stanley reported, these market share estimates:
Flipkart – 45%, Snapdeal – 26%, Amazon – 12%
Despite this, investors and entrepreneurs predict 2016 will witness more intense rivalry between marketplaces Amazon and Flipkart. At the start Flipkart and Amazon competed in electronics like smartphones. It’s likely the two will soon go to battle against each other in the fashion category too. (Now that ecommerce mogul Flipkart has made great headway by acquiring Myntra.) Also Morgan Stanley says, fashion fetches a commission of 45-50% compared to the mere 2-7% derived from the sale of electronics.
“We have clear leadership of the online market in India with over 60% market share in three of the largest segments smartphones, fashion and electronics,”said a Flipkart spokeswoman.“Our focus will be to consolidate this leadership position by continuing to build world-class customer experience, innovate retail in India and build a technology powerhouse out of India.”
Flipkart’s CEO is using all the resources at his disposal to improve customer experience. The marketplace is currently working on its logistics unit for this very purpose. Satish Meena from Forrester Research says, the marketplace needs to regain the customer trust it had two years ago, if it wants to turn the tide.
“In 2015, we grew by more than 250% over 2014,”a spokeswoman forAmazon India said through email.“We are on a momentum to deliver similar levels of growth this year but on a much larger base.”
Snapdeal has a different plan
Snapdeal wants to monetize its existing users through diversification. The marketplace has either entered into or partnered with companiesoffering online services like payments, grocery delivery or travel booking.
“We already have more than 1 million users transacting across our platforms daily, which is more than Flipkart and Amazon put together,”said a spokesperson for Snapdeal.
Will the ecommerce war end once Amazon is crowned kings? Will Flipkart fight hard enough to stay put at the top? Indian ecommerce may have infinite opportunities, but is it big enough for more than one online marketplace to dominate? We’ll only know with time.
Last year marked the beginning of theapp-fever in ecommerce. Some likeMyntra moved to an app-only strategy, while thecompetitors shunnedthe same. However, everyone voiced the same opinion on mobile commerce andmobile apps – it is here to stayand it is multiplying in popularity.
It’s then no surprise that mobile app is an important step in everyone’s expansion plans.Voonik has been increasing in popularityas a fashion marketplace and seems like the etailer wants to capitalize on the app-fever.
Mr Voonik for the Misters
Voonik haslaunched Mr Voonik, fashion app exclusively for men’s fashion. Male shoppers will have the following benefits:
Wide range of clothing and accessories
Save shopping time
Voonik CEO and Co-Founder Sujayath Alisaid,
“When we started Voonik some three years ago, we had a clear vision of becoming the country’s largest fashion destination. With over 7 million app downloads and 9 million registered users, we are the among the fastest growing companies in the sector. But I feel this success is incomplete as we have not reached the other half of the fashion consumers, men. So here we are, launching a dedicated fashion platform for men. With the launch of Mr. Voonik, we are solving a big shopping problem for men. Now they will be able to see the clothes that suit their personality and buy without worrying about the price, and without having to spend a lot of time.”
Behind the scenes, the engine
Mr Voonik has been engineered with an advanced style recommendation engine that will understand the shopper’s preferences, personality, lifestyle and even budget. So the recommendation feed will have results based on these, which translate into lesser shopping time.
Right now, more than 1 lakh products are already available on the app. But plans are in place to add 1000 more brands in the coming months.
For now, the move from Voonik certainly sounds interesting. It is a known fact thatretail therapy for male shoppersequates to the least shopping time required. With the promise of lesser time to be spent on browsing coupled with the plethora of products on the app, it might just strike the right chord with the target audience.
If you are selling men’s fashion on Voonik, don’t forget to share with the rest of us how this works out for your products.
Online furniture and home furnishing marketplace Mebelkart is in the middle of litigation. Furniture groupHousefull International has taken Mebelkart to courtfor non-payment of dues and imitation of brand name. Housefull claims that it had stopped selling on Mebelkart as the latter had defaulted on dues worth Rs. 28 lakhs.
However, they discovered that Mebelkart was selling furniture under the name ‘Housefull’.Akshay Chaturvedi, co-founder of HousefullInternational, says,
“After terminating our partnership with (Mebelkart), later in March we started receiving negative feedback from market associates about our products being fake and definitely not resembling the original quality.”
Lawsuit demanding repayment of dues and copyright infringement
Housefull filed a case against Mebelkartwith the Mumbai police to seek repayment of the outstanding Rs. 28 lakhs and a compensation of Rs. 150 crores for ‘damaging their reputation’.
Mebelkart on the other hand, has rubbished these claims.Rahul Agarwal, CEO of Mebelkartsays that the marketplace had removed Housefull, and not the other way round, “Housefull was delisted from the website due to non-compliance with our terms and conditions.” Hefurther claimed,
“There is no product under the ‘Housefull’ brand name being sold and no use of any trademark of the said brand. ‘Housefull’ is a generic term, and several sellers use the word in their product descriptions.”
A quick scan ofMebelkartdid not throw up any results for Housefull; but this need not be taken as an authoritative conclusion.
Mebelkart AskMe Groups’s protégé
Interestingly, theAskMe groupowns 75% share in Mebelkart.
Litigations are not new to online commerce. Recently,Paytmfiled acaseagainstSnapdealaccusing the latter of stealing business data. Therecent court verdictdoes not fully placate Paytm, but the judiciary is nobody’s pacifier!
100% FDI in ecommercehas resulted in an ecommerce disruption. The restriction on ecommerce discounts and the 25% sales cap on online marketplace sellershave been criticized and praised. The high rollers (in this case, marketplaces) in online retail haven’t said much about their plans to implementthe 100% FDI norms.
Amazon in the Midst of it all
Amazonaims to meet the FDI requirements, but needs time to do so, which is why itappealed to the government and IAMAI for more time. The foreign marketplace wants to put together a process that will enable its sellers to fulfill the new FDI requirements, revealed Amazon Indian’s MD Amit Agarwal in aninterview.
Taking Steps to Follow FDI Regulations – Doing it for the sellers
Amit Agarwal spoke about the recent FDI norms declared by the government.
“The Clarity allows us to invest more to make sellers successful. We will put a process in place that we can provide some clarity to our large sellers on how their share is shaping up, so that they can manage their own business on the platform. We have always been compliant and will continue to be complaint,” He said.
The largest seller on Amazon is Cloudtail. It accounts for40% of saleson the marketplace and is a joint venture set up by Amazon and Infosys co-founder NR Narayana Murthy’s Catamaran ventures.
Other Marketplace Attempts to Meet the New Regulations
Last week we learned about Flipkart’s intent toshrink WS Retail’s share in sales. The process will take time, said the marketplace. This will give other sellers a better opportunity to sell and flourish.
Snapdealon the other hand said it has no issues because none of its sellers have monopoly.
Can Amazon Beat Flipkart?
When asked about theirrivalry with Flipkart, Agarwal gave this reply,
“All I can say is if I look at last year, we grew by 250%, which is four times what the industry grew. And we sold in the last quarter of last year, more than what we sold in the entire year. And we continue to see very strong momentum and no slowdown.”
Strangely, Agarwal’s team is motivated by paranoia. He says,“My entire team is paranoid of a very simple fear that customers will only shop on Amazon until the very moment they find better customer experience somewhere else. And that paranoia keeps us going every single day.”
Amazon’s Investment in India
MD Amit Agarwal also mentioned that the ecommerce giant, Amazon, will keep investing aggressively in India. At the start of this month the marketplaceincreased its authorized capital by Rs.8,000 crores.
Agarwal was recently promoted to Amazon’s core leadership S-team. It allows him to work closely with the marketplace’s founder Jeff Bezos. He said in theinterview, the experience so far is very exciting and humbling. But the important bit is, this is an indication of Amazon’s excitement; about the momentum its franchise in India has gained. That too in such a short span! The marketplace also plans on investing aggressively in the country to transform the way we buy and sell. He added.
Snapdealwants to be everywhere! Last month the company had partnered with onlinefood-ordering platform Zomatoand bus ticket booking firm Red Bus. Around the same time, it was believed that the marketplace has alsocollaborated with Cleartripfor hotel & flight booking.
Yesterday on 26thApril 2016, the ecommerce biggie finally announced on Twitter that its app userscould now book flight ticketsonline.
Eat, fly, travel via Snapdeal
According to this deal, the companies have integrated their application program interface (API) with Snapdeal. Post the successful integration, the etailer will display the respective icons (food, bus and air tickets) on their website as well as app.
As of now, all three services are available on Snapdeal’s app, but on the website, only online bus ticketing icon is visible.
A Cleartrip managerrevealed,
“Snapdeal will have access to our flight inventory, and we will share a portion of our commission with them.”
Building an ecommerce eco-system
Online travel that includes hotel and ticket booking has the largest market share (87%) in the Indian ecommerce industry. Therefore, it seems wise that Snapdeal decided to dabble in this segment.
Venturing into finance, real estate, travel, food, logistics and other such sectors besides retail proves that Snapdeal is keen on setting up a sustainable ecommerce eco-system. The etailer want tolook beyond GMVand invest in technology and other profitable arms.
However, some believe that their core focus area will always be its marketplace.
“Getting the inventory and the price is a commodity business… But these are mega malls with many buyers. For Snapdeal, travel will never be its main business, for us, it is,”saidAshish Kashyap of Redbus.
The lure of online travel
Online travel is crowded and tough market to crack, but the potential is huge. More so for marketplaces that already has huge buyers/visitors base. Ecommerce biggies have realized that without much investment, they can create an alternate and healthy source of revenue.
Paytm had entered the travel spacelast yearwith bus ticketing service. The Alibaba backed marketplace has nowdeclared that it will soon offerroad, rail, airline and tour bookings as well.
Abhishek Rajan, Head- Travel Marketplace at Paytmsaid,
“Our intention is to continuously add new travel categories to the platform and drive organic growth without making large marketing investments.”
As the e-commerce market grew by leaps and bounds in the last four years, investors have shifted their focus to profitable growth to achieve stability, a CII-Deloitte report says.
According to the report, e-commerce B2C segment has grown significantly, leading to creation of many ‘unicorns’.
“However, focus of investors going forward seems to have shifted to profitable growth to achieve stabilisation of the economic model,” said the report titled ‘e-Commerce in India – A Game Changer for the Economy’.
It further said the primacy on profitable growth seems to be leading to collaborations and partnerships across the value chain with the aim of optimising costs.
It forecast that since the e-commerce B2B segment is showing signs of rapid digital adoption, this is likely to feed the significant rise of MSMEs and entrepreneurs from the Indian hinterland.
With a push from investors for profitability and early break-evens, the leading e-commerce companies are seen to be cutting down their burn rates by as high as 50%.
“This aggressive drive comes at a point when capital is becoming scarce for top venture-backed online retail companies. There is also a reduction in dependence on discounts as a growth strategy,” the report added.
The e-commerce industry is expected to form the biggest chunk of the Indian Internet market with a value of approximately $100 billion by 2020.
According to the document paper, the e-commerce growth has been brought about by increasing Internet and smartphone penetration in not just metros, but in tier two and three cities.
Mobile devices are further expected to drive sales through online platforms over the next 5 years, it said.
Gurgaon-based on-demand grocery delivery service PepperTap hasdecided to shut downits operations.
“We couldn’t shake off the feeling that we were walking (not racing like some other companies) towards the edge of a cliff hoping that things will get better before we reach the abyss,”wroteNavneet Singh, CEO ofPepperTap.
The founder felt that by continuing to operate in the e-grocery field where the company was losing cash on every order no matter how big or small, they might be doing a major disservice to their investors and employees. Hence, even though shutting down the business was a difficult choice but a necessary one.
“Because the unique challenges of this business are not solvable in the short term and certainly not solvable without massive injections of capital, we would have to confront this issue sooner or later.”
Great start but couldn’t handle the pressure
The grocery start-up which was in for the long-haul had a great start. Their popularity grew rapidlyand investors were generous with funds.
Just a year ago Singhhad shared with IndianOnlineSeller,
“We were lucky to get our first order on the day of our android app going live. We slowly grew from a humble 50 orders a day to 100 orders per day within January 2015. Today we are 125 people and 10,000 customers strong.”
A year later things have drastically changed. In February this year, the company closed operations in 6 top metros. Its direct competitor Grofers made it even more difficult for PepperTap to function smoothly. On top of it, the investment climate changed.
An ex-employee disclosed how Grofers’ growing business jeopardised PepperTap’s measured but well-planned growth plan,
“Overnight, the plan changed. We were told to focus on aggregation and fulfilment. We had to be faster than Grofers.”
Hyperlocal business model is the problem?
It appears to be, yes.
Big Basket, which has been asked to come cleanabout its business model, is the current market leader in the online grocery business. The co-founder of BigBasket feels that this ecommerce vertical can only be successful or feasible by following an inventory-led format, not an on-demand one.
PepperTap’s founder too shares thesame sentiment,
“The reason BigBasket can give you deeper discounts on perishables is because they source from wholesalers and stock inventory. They don’t go through retailers. Every bit of money they make is their own.”
To be fair, the entirehyperlocal grocery& food-ordering industry is struggling at the moment.
PepperTap’s focus on logistics business
PepperTap’s goal from here on is to channel all its energy on the logistics business – parent company Nuvo Logistics. The company is going to use the knowledge it has acquired in the last year and a half while trying to solve last-mile delivery issues and fulfill the ‘on-demand’ delivery promise.
Stating that his start-up was ‘born to be a logistics company’, Singhsaid,
“We are already working with many e-commerce firms and have a strong reverse logistics operations. In the next few months, we will focus on strengthening our forward logistics.”
We hope that PepperTap’s transition from grocery to pure logistics pays off.