Logistics Providers for e-Retail: What are your options?

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

1. Blue Dart

Blue Dart is a trusted name in the industry, and they are known for their timely deliveries and extensive area of operations. Apart from this, they offer a range of comprehensive tracking tools specifically 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.

2. DTDC

Last May, DTDC came up with Dotzot, 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 offers three types of services – express, economy and premium, depending upon your needs.

3. Aramex

Another trusted name in the business, Aramex offers 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.

4. Delhivery

The new kid on the block, Delhivery is already making 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.

5. Ecom Express

Ecom Express is 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 a wide range of services – including pre-paid, cash-on-delivery, cash-before-delivery, etc.

Rocket Internet pumps capital into GFG, but devalues Jabong

Online fashion etailer Jabong has reason to smile. Investors Rocket Internet and AB Kinnevik have given a $ 339 million to 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 company joined the GFG in April 2015. Shortly after (October 2015), GFG was in talks with Snapdeal to sell off the company. Then came the news that the company had had a good run in January 2016, and was hoping to break even soon. However, the company was still seeking out buyers. Kishore Biyani’s Future Group bought FabFurnish from Rocket Internet, but declined to buy sister concern Jabong. The company later brought 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.”

Ecom devaluation

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.

Sale events will have to wait, decide Flipkart, Snapdeal & Amazon

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 after 100% FDI policy.

Sources revealed that Flipkart called off its May app-only sale. Snapdeal and Amazon too have cancelled their upcoming discount events.

A person aware of this development disclosed,

“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 discounts and sponsoring big sale events, which they are so used to doing. Those who refuse to comply, DIPP’s warning is 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, Snapdeal and Amazon have decided that until they figure out a way, sales will have to wait.

Temporary hold

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, discounts won’t stop but etailers need time to 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. He elucidated,

“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 norm doesn’t benefit anyone.

Ecommerce companies have been saying for a long time that discount-driven model isn’t practical and it needs to go. Losses running in thousands of crores are a result of spending precious funds on deals.

Amazon beats Snapdeal on the ecommerce leaderboard, but is it the leader yet?

The latest score calculations put Amazon in Snapdeal’s second place. While Flipkart is still sitting pretty in its number one spot, but marketplace 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 estimates from 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 growth but Amazon seems to think differently. Amazon has not disclosed any sales target like Flipkart’s $16 billion target from 2015.

Signs of Amazon’s Domination

The increase in Amazon’s market share is 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 is still 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 to cut 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 regulations from 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 rule so 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.

Flipkart says:

“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.

Amazon says:

“In 2015, we grew by more than 250% over 2014,” a spokeswoman for Amazon 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 companies offering online services like payments, grocery delivery or travel booking.

Snapdeal says:

“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.

Mr Voonik, the fashion marketplace’s mobile app to impress male shoppers

Last year marked the beginning of the app-fever in ecommerce. Some like Myntra moved to an app-only strategy, while the competitors shunned the same. However, everyone voiced the same opinion on mobile commerce and mobile apps – it is here to stay and 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 popularity as a fashion marketplace and seems like the etailer wants to capitalize on the app-fever.

Mr Voonik for the Misters

Voonik has launched 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
• Personalisation services
• Style recommendations

Voonik CEO and Co-Founder Sujayath Ali said,

“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.

Smart move?

For now, the move from Voonik certainly sounds interesting. It is a known fact that retail therapy for male shoppers equates 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.