How The Growth Of E-Commerce Is Reshaping The Logistics Landscape?

Let us closely analyze the current scenario and how both logistics and e-commerce industries are complementing each other

The eCommerce industry is gradually coming to age in India. The industry, which stood at $39 billion in 2017, is forecasted to clock $120 billion by 2020 – experiencing a CAGR of 51 percent throughout the period. This is more than seven times our GDP growth rate.  

The boom that the eCommerce industry is experiencing at present is having several positive effects on the nation. For instance, it has been catalyzing the retail goods movement and, as its direct result, serving as an enabler of new-age logistics infrastructure within the country. This heightened market activity is because we are now able to tap the market demand that earlier used to remain untapped. 

Let us closely analyze the current scenario and how both logistics and e-commerce industries are complementing each other.

E-commerce sector, Logistics sector, and the perfect market alignment of the two!

The rise of digital technologies has been a boon for our society as it has turned the world into a unified marketplace. According to a KPMG report on online shopping behavior, the primary reason why people shop online is that they can do so round the clock without any hassle. As many as 58% of respondents cited this as their primary reason for shopping online. Online shopping also enables a person to compare prices more easily (without any physical exertion), discover ongoing and upcoming sales, and strike the best deal available.

So, the exponential boom that the e-commerce industry is experiencing at present doesn’t come as a surprise. However, this ongoing development is helping us to emerge as a dynamic market. The digital framework has made it easier to visualize individual processes where bottlenecks cause friction in customer satisfaction. This includes customer interaction, customer conversion, and after-sales services to name a few. For instance, a whitepaper titled ‘Pulse of the Online Shopper’ by UPS revealed that 48% people find guaranteed delivery dates important while checking out online. Technically, if a delivery is not processed on time, it is going to leave around half of your customers disgruntled.

But this customer demand can be seen as both a challenge and an opportunity. The abovementioned UPS report also highlighted the fact that around 80% of customers look for same-day shipping. Interestingly, half of the overall shoppers are willing to pay extra for the faster deliverable. This is where the logistics industry comes into the picture. Delays in shipping – i.e. supply chain movement – are usually caused by a number of factors including opaqueness of shipment, tailbacks in freight transfer, slack processes of a courier operator, and so on. Such challenges usually occur due to lack of visibility within logistics operations. The fast-paced digitization has simultaneously enabled us to gain greater visibility and control over the logistics processes. Moreover, it has eliminated a number of troubles arising from supply chain operations, thereby creating a market of opportunities.

The unprecedented growth of eCommerce is today reshaping logistics across the globe. Several eCommerce companies, such as Amazon, eBay, and Alibaba, have made courageous expeditions into logistics. They are today trying and testing various novel ideas including drones-, droid-, and autonomous vehicle-based deliveries to make freight transportation and last-mile deliveries more feasible. The e-commerce landscape is becoming rife with such examples at present, signaling our move towards ultramodern operations.

It goes without saying that new opportunities also create fresher challenges, especially for those who are not able to avail them. Today, as larger e-commerce players continue to adopt cutting-edge approaches, it is simply impossible for smaller retailers to catch up with them. They reluctantly have to fall in line with larger e-commerce players and their pricing models for current and upcoming proprietary services. Otherwise, they will end up losing a substantial part of their present and prospective customers. This is an area where independent aggregators such as Shiprocket are helping make a difference. 

Such platforms add a competitive edge for both retailers and eCommerce platforms. It is being done by providing a higher degree of control over costs and making logistics operations more credible. For example, some of these platforms have tie-ups with a number of courier partners. This, while providing the ‘economies of scale’ advantage to smaller retailers, also enables them to expand their reach nationally and globally without facing exorbitant pricing. Moreover, they improve the overall customer experience by ensuring that a smaller retailer doesn’t come on the receiving end of SLA violation of a courier partner. Such aggregators provide in-depth insights into operations, thus enabling a company to keep a tab on their reports and analyze them further to streamline operations.

Today, with the advent of digital technologies and eCommerce, we are transitioning into a futuristic era where vertical players will tap on the unique consumer needs. The best part is that such developments along with improving our delivery operations will also help us in making the logistics operations all the more robust and effective.

Disclaimer: The views expressed in the article above are those of the authors’ and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

Saahil Goel

The author is CEO and Co-Founder, Shiprocket Published 14 April, 2019

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