Ecommerce Logistics: Prospect amid Pandemonium

 Early this year (January 13, 2021), Dublin-based ResearchandMarkets.com published a report titled, “India E-commerce Logistics  Market Forecast to 2027 – COVID-19 Impact and Regional Analysis by Service Type, Operational Area, and End User.”  According to this report, Indian e-commerce industry is estimated to grow at a CAGR of 18.8% to reach $11.48 billion by 2027 from its current figure (2019-20) of $2.93 billion. 

While the study shied away from presenting the methodology and base figures to arrive at its proposition, it nonetheless underlined the service and operational aspects of Indian Ecommerce industry. Indeed, more than 4/5^th of share in Indian ecommerce industry is of services; it is the operational or its business to consumer (B2C) aspect that should be matter of interest in the field of logistics. Astronomical figures in valuation and impressive growth forecasts looks good but often fails to identify the bottlenecks and to address the operative economics.

Indian e-commerce and B2C market has been flourishing for over a decade and half due to tele-revolution, internet penetration, a burgeoning deep-pocket middle class armed with smartphones; favorable demography, and a policy-business confluence that is fundamentally conducive to this growth. However, it will be erroneous to see B2C logistics separately from B2B logistics. 

Except for marketplace, basic architecture of hub-and-spoke, network penetration and reach and capability to service to the “number” of pin codes remain largely the same for both B2B & B2C. Ecommerce or B2C is an organic journey of logistics from transportation to express distribution to business to consumer. Logistics and business processes evolved and in recent years, it is consumer satisfaction which is the key. 

Most profound impact that the e-retailers have had on traditional methods of Indian logistics is their adoption of tech-enabled business practices and automation. This has compelled the entrenched B2B firms to invest big and cut-out on manual interventions. We now see a greater urgency on efficiency and processes.

With the adoption of GST as a uniform taxation system, the urgency has further enhanced. The invoice sizes have reduced thereby adding wings to the packages. There is now an enhanced recognition to the last mile delivery ecosystem, with the focus of business shifting from the seller to the consumer, both the traditional and B2C businesses are forced to invest on the personal hygiene and soft skill development of delivery staff. 

A peculiar and welcome development in the field of logistics is taking place silently. There is a greater demand for drivers and helpers well-versed in handling smartphones, have knowhow of the technology, and trained are in soft skills. Demand for “entrepreneur drivers” is already very high and we are soon going to see driving schools churning them out.

Ravaging Covid pandemic, however, has a detrimental effect on overall logistics industry and ecommerce is no exception. With localized lockdowns and severe restrictions in movement, things have gone for worse. With only essential services allowed and people are too shocked to be indulgent in consumerism, inventory is piling up, warehouses are crunched for space and there is hardly any incentive to move around. All the major e-retailers have been focusing on groceries, medicines and other dietary products & supplements which constitute less than 10% of India’s B2C business.

When it rains, it pours is an age-old wisdom. The economic turmoil caused by the pandemic has exposed its vulnerabilities. In this decade, much will depend on the ability, intent and urgency with which the ecommerce ecosystem will address its systemic ills, like

·         Concern over data security and individual’s privacy,

·         Bringing about synergy in FDI policies of the Government of India & Ecommerce marketplace,

·         Developing a right mix of automation and human contribution to processes and results,

·         Consolidation or Fulfillment Centre expansion, efficiency in process flow,

·      Balance between commercial interest and consumer protection issues, including protection from fake   and imitation items.

Most important item on the agenda of ecommerce or B2C companies, however, should be on addressing the gap between product cost and product pricing. For, we have been witness to a score of them as quickly vanishing as they come up.

Source: https://www.reddit.com/user/safexpress1/comments/nfvnr5/ecommerce_logistics_prospect_amid_pandemonium/