Where e-commerce majors are increasingly experimenting with new logistics permutations such as‘Click and collect’, to attract more and more shoppers, financial service providers also seem to be extending support through warehousing facilities.
Flipkart recently announced plans to set up 500-1,000 sq ft pickup or collection centres in smaller cities with a population of up to 50,000. The company has already launched 20 so-called ‘experience zones’ in 10 cities and plans to open 100 centres across the country by March 2016.
Driven by this approach, Yes Bank and two payments companies — Fino PayTech and Pay Point India — are reportedly working to provide warehousing facilities to help ecommerce companies overcome the last-mile connectivity hurdle.These tie-ups will allow customers to pickup goods ordered online at a pre-specified location that are run by these financial services provider. This is the first time where financial services firms are providing real estate space to ecommerce companies to boost their businesses.Yes Bank is expected to launch a new product, Smart Box, which is primarily a kiosk with many lockers and payment acceptance piece built into it. The customers of the ecommerce company will be offered option to pick-up their goods at any of closest kiosks run by Yes Bank.”The Smart Box is designed for ecommerce entities to solve their logistic problems,” Ritesh Pai, senior president digital banking, Yes Bank, was quoted as saying. “It works well for nuclear families who do not have anyone at home to collect the delivery of product.”
Last year, Snapdeal had tied up with payment technology firm Fino Paytech to provide assited e-commerce centres in areas which do not have internet access. The services allow consumers to collect orders from any of the Fino’s 5,000 Money Marts.
“Only 5 per cent of purchases happen online and remaining 95 per cent are on the cash market. Till now, the ecommerce companies are fighting for the 5 per cent client and they are building the products to match their requirements. But now they have begun targeting the remaining 95 per cent market,” Ketan Doshi, managing director of Pay Point India, was quoted as saying. He estimates that 12-15 per cent of the products are returned due to last mile pain points.
One of the main challenges for ecommerce companies today is the possible unavailability of customers at delivery times, which kicks off a process that ramps up costs for both the company and its merchants. Offline collection centres could resolve this problem as well as eliminate last-mile delivery costs, which typically account for about 28 per cent of the total cost of transporting goods for ecommerce marketplaces.
Last year, Amazon India started similar pickup services under the ‘Amazon Pickup’ programme that let buyers collect their parcels from selected locations.The service has grown from 20 pickup centres in Bangalore to 800+ points across 45 cities, including Thoothukudi, Thanjavur, Vijayawada, Belgaum, Kolhapur, Rajkot and Ludhiana.
The company had piloted Amazon Pickup at Bharat Petroleum’s In & Out stores in Delhi and Mumbai last year. Going forward, the company plans to extend this deal to make all the In & Out outlets across the country its pickup points. Currently 35 In & Out stores have already been on-boarded to act as pickup points for Amazon.
Meanwhile, Snapdeal also conducted a pilot on establishing collection centres recently and is looking at doing full-scale zone up programmes on these collection centres.Globally, customer pickups of ecommerce orders are not a new strategy. Amazon launched Amazon Locker in 2011, through which customers can retrieve their packages at a local locker location using a personal code. The company also has thousands of pickup points across Canada.
Industry experts believe that with smartphones proliferating in every nook and corner of India and online shopping growing in tandem, an offline system such as as physical collction centres will be a necessary innovation for ecommerce merchants to control costs, while making good on delivery promises even in far-flung geographies.
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