My thoughts on the Indian e-commerce logistics market 2016 - An interview to AT Kearney

• How has the ecommerce logistics market evolved over the last 2-3 years and what are the key trends that are emerging

If you probed deeply, many e-commerce organizations are actually supply chain and logistics organizations, who also happen to sell merchandise. With that definition in mind, I think the last 2-3 years saw a huge revolution in the logistics space in India, especially in the last mile. 

Most organizations realized that establishing a sustainable and profitable business meant, first establishing a sound logistics capability whether in house or outsourced. It is no more an after thought, which bodes well overall for that industry.

The last few years have seen multiple innovations in the modes (COD, scheduled delivery, exchanges, try and buy etc.)  visibility, delivery timelines, control over the last mile and more importantly a significantly better customer experience in the logistics sector. From 4-5 days, which was the norm 2 years ago, to same day deliveries, organizations have progressed a lot. And with hyperlocal businesses in the fray, that has further come down to 2-3 hours!

• How have the operating models of the logistics companies evolved? (In-house/outsource different parts of the value chain)

Operating models have evolved, as and when organizations have understood the needs of the customer better. With a very high population in India on the smart phone network and increasing day by day, the average customer is constantly connected and hence demands more now. 

For example, the customer started wanting to and is now able to track each and every shipment real time. This was considered a good to have feature 2 years ago, but any organization starting now, would consider this as a must have.

Also, the larger the volumes, an organization was shipping, the better the unit economics.

The enhanced customer expectation and increasing sales meant, there arose a need to better control and expose your logistics and fulfillment network to the end buyer in a cost effective way. That lead to many organizations starting to build their own in house capabilities, as an internal supply chain means more control than an external one. 

In house logistics arms also meant that, an organization could  pass on its cultural values to the last mile delivery boy easily. This gave a more personalized experience than having it delivered through traditional logistics companies.

However, there also emerged specialized e-commerce logistics players which offered better unit economics and the freedom to an e-commerce organization, from maintaining a large payroll. Even traditional logistics organizations, now have, specialized e-commerce arms that deal solely with the wide gamut of online players.

• What are the key success factors across different segments – First mile, fulfillment centers, line haul and last mile?

Success factors depend upon the business that an organization is in. For example, there are many food tech companies now, or should I say logistics companies, which happen to deliver food, whose success actually solely depends upon the speed of delivery and maintaining the quality of the food they deliver. 

For other e-commerce organizations, the success depends upon a combination of the end customer experience, the packaging, the speed and the accuracy of the deliveries. 

In summary, speed has continued to remain a key success factor across segments.

• What are the implications of hyperlocal on ecommerce logistics market?

This is a very exciting space in India now. Hyperlocal is all about maintaining and innovating to make your logistics more proactive than reactive. Traditional hub and spoke models may not work with hyperlocal. Most hyperlocal businesses are centered around groceries, staples and food. As I mentioned before, speed is of the essence here and they also happen to be low ticket items.  You expect to see brilliant innovations in this space right from workforce management and routing to technology optimization. We have already started seeing transportation aggregators use their fleet to deliver groceries in less than an hour!

• What are the key innovations we are seeing in logistics across the different segments? (Like pickups etc.)

Pickup is another interesting area where the industry is going through rapid innovation.  Many traditional brick and mortar organizations have also introduced the online ordering and pick up option to customers. Many e-commerce organizations have either created their own offline space or have tied up with offline partners where they allow this facility to their customers. 

You again expect to see a lot more of omni-channel experience than just a 'delivery to home' in the near future. The best would be if someone could deliver my order when I wait at the Silk board or the Sony World junction. I would reckon that that, day may not be too far away!