With e-commerce growing at a steady rate and several sectors, be they in food delivery, grocery delivery etc creating the need for domestic logistics, the sector is expected to see a huge upswing in the coming years.
Presently each day there are a million shipments for e-commerce portals and two to three million deliveries each day in the food, grocery and pharmacy product categories. The average value of each delivery is Rs 60 to 70 per order. Making logistics industry approximately a $1.5 billion industry. This is expected to grow 20 to 30 per cent in the next few years making it a $4-$5 billion industry by 2023.
With the increasing demand, the logistic sector is expected to go through transformation with the use of a lot more technology. The phase of automated warehouse and automation of last mile deliveries has already begun in India, however, this is comparatively slower mainly taking into consideration the size of the country.
In-house logistic or third party?
One of the biggest questions is whether to go in-house logistic wing or hire third party to handle all logistics. While this depends on the size and scale of the e-commerce portal, most experts say a combination of both is the ideal fit. Logistics can make or break a e-commerce company, hence it requires experts in the industry to make the whole process of taking goods from the point of origin to the destination and making them reach on time. A good example of this is 2016, when Redseer Consulting, a research firm, found that the customer satisfaction of Flipkart fell mainly as its average delivery time had increased from 3 days to 7 days.
In case of a third party logistics arm the biggest advantage is the volume. Whether it scales up during a sale or goes down during an off season, the company can easily adjust to it. Also it means lesser manpower and investments. However, the disadvantage is finding a third party company that matches specific requirements as well as losing 100 percent control over the operations.
Automation in logistics industry
The phase of automation of warehouses is already here. Urban Ladder, a furniture e-commerce company has already begun automating its warehouses completely. The company had said automation of delivery planning and picking up of goods for deliveries had helped them gain 10 to 15 percent better efficiencies. This in turn incrases the process to profitability. Even companies such as Gati and ecommerce portal Flipkart have signed up for automated parcel sorting and automated parcel capturing systems to handle huge volumes of packages.
Last mile automation
While all other steps in the process are taken care of, the last mile delivery still remains a huge challenge for e-commerce companies. This is because it is still mainly manual, which makes it time and cost consuming. Going forward, in the next three to four years, companies will focus on improving this.
The wave has begun in India. Well known serial entrepreneur and investor, Ravi Gururaj, has started a company called Quikpod. An IoT enabled solution, through which a delivery boy delivers goods in a box in the locality. The same is collected by the consumer by simply entering an One Time Password. Another Bangalore based company, OpenApp has already installed these boxes in more 1000 apartment complexes in Bangalore, which consumers operate using a mobile app.
The advantage of this is no multiple trips, lesser cost and time wastage. It also ensures multiple deliveries at the same time while also being secure for customers.