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Delivering logistics to e-commerce

11-March-2011
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Delivering logistics to e-commerce

One of the major problems with e-commerce is customer fulfillment, because unlike a brick and mortar store, the customer is not walking out of the shop with the product in his hands. This is an area where a lot of companies have had to work very hard to address, and logistics companies have come to fill that gap for online firms.

For a company like Homeshop18, which retails through television, the Internet, and is looking at new mediums as well, the business lies mainly in getting the product in the hands of the customer, as quickly as possible.

Sundeep Malhotra, CEO, Homeshop18, said, “The last mile delivery experience for the customer is very important piece for any retail organisation to have positive customer experience across touch points. We are facilitating the logistics delivery to our customers via top logistics companies in India, including Blue Dart (DHL). Currently, Homeshop18 has the logistics reach to service customers in over 3,000 towns and cities across India. Yes, we do believe, ownership of the last mile delivery to the customer is critical to ensure higher level of customer satisfaction in the long run.”

Chandrashekhar Pitre, Marketing - Head, DHL, said, “e-commerce solutions are something that as a logistics company we have to provide, because it helps create more touch points for our customers. Even now though, more than 50 per cent of companies insource their logistics, and this is an area we are trying to grow into. After all, everyone has an area of expertise. Could they deliver the products themselves? Absolutely. But we’ve got specialised mechanisms in place to minimize waste and maximise ROI, so particluarly for an e-commerce startup, it makes much more sense to work with a logistics company like DHL.”

Percy Avari, Country Head, Aramex India, said, “There are many essential elements in the fulfillment process; including the accurate transmission of delivery information, having storage solutions that are efficient, a tracking system that allows the customer to always know where the product is, and attentive customer service to help with any issues. Aramex has various products to fulfill this process; for example, our e-commerce APIs helps customers to integrate their order system with our logistics and delivery system, creating a seamless process for products to reach from the order stage to the final destination at the customer's door-step.”

For an e-commerce company to tie up with a logistics company like Aramex essentially means that they can leave the entire business of logistics alone and focus on their core business. Avari said, “When you use a third party logistics provider like Aramex, you are outsourcing all your needs to one source that can handle all the requirements in an e-commerce order. So, it is more reliable, and you only need to deal with one side as opposed to several providers or trying to do it in-house, which is challenging since the logistics involved in customer fulfillment is complex and requires extensive experience.”

Outsource or Insource?
He added, “This type of system scales up effectively; currently we are working with several e-commerce companies that started modestly and now are major distributors. So, having this kind of relationship with a third-party logistics provider works well for both parties; as you grow together and as long as the communication channels are open, there is always constant feedback and evolution of services.”

However, Mukesh Bansal, CEO, Myntra, does not agree. He said, “While courier companies are essential in the first stages of growth, we are considering our own deliveries now and believe this is something that everyone must look at, taking into account efficiency and ROI. Once a company has achieved scale, it can make a lot more sense to handle logistics yourself instead of outsourcing it, so as to have complete control over every stage of your business.”

For all e-commerce companies though, the message is clear – in the early stages at least, they cannot afford to look at all aspects of the business, and not just because outsourcing non-core functions is cheaper. At the early stage it is also critical for the business to focus on its core competency, and look to other areas only after a certain growth has been achieved.
 

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