Logistics is the key for any online business and forms the major part of an online company’s operations. To cash in on the importance and essentiality of this aspect, Snapdeal is gearing up to extend its own logistics platform Safeship to rival sellers in a few weeks’ time. Other ecommerce companies will be able to access and use this service to take care of their logistic requirements at a nominal usage fee.
Marking Snapdeal’s entry into the fast growing logistics market, this software platform will offer courier options to sellers which they can use to deliver purchases to customers. Until now, this service was available only to sellers selling their products on Snapdeal.
Following eBay’s investment in Snapdeal in February this year, the founders have plans to expand business to ensure smooth experience for both the buyers and sellers. They consider themselves to be technology enablers for businesses and the extension of their logistics service will further re-establish their foothold in the online selling business.
Safeship has proved very beneficial for the 20,000+ sellers on the Snapdeal marketplace. Both sellers and logistics providers have been able to save one-third of their operating costs using this service. For packages weighing less than 1 kg, average shipment rates for goods sold by online retailers are in the range of Rs 55-70. Cash-on-delivery products have an additional charge which is levied based on the product value.
The basis of usage fee could be any one of the following – licensing fee model, fixed price model or pay as you go model. Additionally, Snapdeal fulfillment centres will also be open to other sellers. If a retailer or marketplace has the means for it, it is beneficial for them to capitalize on the technology platforms they have and add to their revenue. It is unlikely that competitors will use the service.
Previously, Flipkart launched its own logistics arm eKart which is available for its rivals as well. With a reach of over 150 cities, it has enabled retailers to expand reach and widen their customer base. Accordingly, the profit of WS Retail (eKart is a part of this) increased to Rs 2.03 crore in fiscal 2013 as compared to the previous year.
Benefits of logistics platforms for online retailers
- Mid and small scale retailers will utilize such platforms to expand the reach of their business.
- Retailers can cut down on their operating costs (as much as one-third reduction in costs) which would add to their profit margins.
- The technology platform provider would be able to ease out bottlenecks much quicker and more efficiently as against individual retailers having to counter hurdles in a physical network.
- Retailers would not have to worry about the efficiency of various logistics providers. The absence of good and efficient logistics providers or courier companies have so far limited sellers in their selling patterns, with some of them having to rework on their selling strategies or distribution patterns.
- Retailers can price their products better to appeal to more customers. Logistics costs mostly constitute 10% of products’ price and a reduction in this will be helpful in reducing final prices.
- Retailers can process more orders in a day. The Snapdeal team would be handling the packing and delivery products from the warehouse, thus relieving sellers of the headache and resulting limitation in the number of orders that can be processed per day.
- Retailers can opt for a favourable logistics providers based on price and quality of service. They need not be tied down with arbitrary shipment rates. The technology platform will be programmed such that an algorithm or process will suggest the best logistics provider for the retailers’ service.