In an effort to reach the customers quickly within a few hours of the purchase, India’s leading e-commerce giant- Flipkart has planned to ramp up its logistics division eKart for competing with on-demand startups doing super-fast product deliveries.
We had earlier heard that Flipkart and Snapdeal are working on super fast 3 hour express delivery systems, but nothing was announced officially by Flipkart back then.
Many other online marketplaces including Amazon India and BigBasket have already been doing this for a while now, so Flipkart has also decided to not miss the opportunity and has jumped on to the express delivery bandwagon.
“We are doing a ton of stuff (with hyperlocal),” said Binny Bansal, co-founder and COO at Flipkart. Binny didn’t give out more details about the company’s plans but said, “We are serious about it. Hyperlocal needs to be done in the right way.”
Express Delivery Is Not To Be Taken Lightly
It is worth noting that the hyperlocal businesses in India have raised more than $140 million in investments this year.
On-demand startups like Grofers and PepperTap have already raised huge sums from investors like Sequoia Capital and Tiger Global. These startups provide super-fast deliveries by tying up with local retails, enabling them to ship the product to the buyer from the nearest retailer. While big players have been offering same-day delivery since a while now, delivery within a few short hours is a new ball game altogether.
Marketplaces like Flipkart and Amazon haven’t been able to do that till now, and are hence working on improving their respective logistics divisions.
Flipkart is planning to invest somewhere between $80-100 million this year alone for strengthening its supply chain and is also working with on-demand logistics start-ups like Delhivery and Roadrunnr.
“Supply chain is completely broken in e-commerce. The growth in the market is so much that we cannot absorb all the growth in eKart,” explained Binny Bansal. The inability of eKart to handle the increasingly growing needs of Flipkart’s logistics needs might be the probable reason why the company is working with other on-demand start-ups.
Binny also mentioned that eKart aims to hire at least 350 experts in the product and technology to take the total strength of eKart to 500 people strong. “We are building a solid team of experts – technology, supply chain design experts, and product experts in a huge way,” he added.
Our Take
Given the amount of capital (more than $140M) that hyperlocal businesses have absorbed this year in India, it is a sure sign of the next-big type of logistics business in India. The modern online shopper doesn’t want to wait even 3-4 days to get his/her goods delivered as it doesn’t give instant gratification like offline shopping.
While express delivery is not a major deciding factor for making online purchases from a particular web portal, it surely feels good to have your items delivered within just a few hours of placing the order. Isn’t it?
Industry experts believe that these efforts for making express deliveries by e-commerce giants are a step in the right direction. “This of course will be a key differentiator but won’t change buying patterns. Express delivery of sorts would be very useful for some specific products. Given the speed at which e commerce is rising, these value additions could come in handy for long term dividends,” said Mohit Bahl of KPMG.
Now, as express deliveries would be fairly new concept in India, it is expected that e-commerce companies won’t tag a premium price to it at least in the beginning. The charges for these quick deliveries are expected to be very affordable at the start, but will come at a steep premium as the market matures.
Many smaller e-commerce companies have already started to toy with this hyperlocal concept. Sangeetha Mobiles, a Bengaluru-based mobile retailer has been offering express deliveries since a few months now and has stated that its customers loved the 47-minute-delivery promise. “Speed, of course, cannot be the prime or most important factor to encourage a consumer to make a purchase, but it is definitely a service several buyers have praised us for,” said Subhash Chandra L, MD at Sangeetha Mobiles.
We would be very much interested to know how big e-tailers would offer huge discounts on their products when they’ll source them from the local retailers. Or may be in future, they would not offer much discount at all and ask for premium charges for express delivery.
Well, it will be too early to have any predictions but the Indian e-commerce market will definitely have to adopt to this growing trend of hyperlocal express deliveries at some point in near future.
