Gone are the days when the buyers used to get purchases delivered in seven working days. Now, the big daddies of Indian e-commerce, including Amazon, Flipkart and Snapdeal are experimenting new logistics permutations and other innovative ideas, related to product delivery, to attract more and more shoppers.
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.
Moving on this path, India’s largest online retailer, Flipkart, reportedly plans to set up 500-1,000 sq ft pickup or collection centres in smaller cities with a population of up to 50,000. This will help the company to pace up its delivery model to tap into the growing demand in these markets. It has already launched 20 so-called ‘experience zones’ in 10 cities and plans to open 100 centres across the country by March 2016.
As per the new delivery model, Flipkart will send goods to a collection centre; the shopper will be informed through a text message sent on the mobile number. Subsequently, the customer can collect the package from a collection centre.
Flipkart launched this pilot project in January this year. “A six-month pilot of the project saw at least 80 per cent of orders picked up at the collection centres,” the company said in a media report.
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, online marketplace major Snapdeal also conducted a pilot on establishing collection centres recently and is looking at doing full-scale zone up programmes on these collection centres.
Flipkart’s model mirrors the strategy deployed by e-commerce companies in price-sensitive markets like France, Germany and China to help improve profitability. In France, a network of pickup points such as Relais-Colis and Mondial-Relais allow for parcel pickup and returns at local stores, including tobacco shops
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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