Startup or Established Logistic Player- Whom should you choose?

Attention sellers! Your buyers will discard the shopping cart if the delivery date offered by you does not match with customer’s expectations. Based on the below Webgistix’s infographic, nearly 42% of shoppers abandon their cart if the delivery time is slow and a staggering 75% of customers expect you to give them a way to track orders in real-time.

Importance of Logistics

This is how important role logistics play in the ecommerce zone. Logistics and delivery forms the backbone of any successful online retail venture. Even more so now, when Ecommerce industry is growing at a jet speed and flash sales are becoming a norm. Just the recent concluded GOSF is a proof enough that if customers don’t get what they want, where they want and when they want, they will quickly migrate to another shopping site.

Quick, safe and correct delivery is what customers as well as business owners want, which is ensured by a right delivery partner. So what makes a logistics firm the right partner? Are established players the safe bet or new players are more feasible?

Who the big e-tail players rely on?

DHL, Blue Dart, Aramex, First Flight, FedEx, DTDC are some of the top logistic company in India. However, Online Shopping giants like Flipkart and Jabong have their individual logistics firm. For instance Ekart Logistics is Flipkart’s arm that delivers goods to consumers. They have other courier partners too. Whereas, GoJaVAS (Jabong Value Added Services) fulfils orders of Jabong’s customers. Jabong has also partnered with third party courier services such as First Flight and DTDC for delivery.

FashionandYou and Myntra use reputed firms like BlueDart. On the other hand Amazon uses the services of Gati and FedEx along with BlueDart. Amazon also recently tied up with 50-year-old logistics provider, Patel Logistics that helps them to transport goods from one airport to another in the bid to win the ‘fastest delivery’ battle.

Benefits of an established logistic partner:

• You can reap the benefits of the already existing reputation, goodwill and trust.

• It is much easier to navigate into new markets with their help

• You can be assured smoother operations and they have high accountability

• Reliable and handy information on legal, regulatory and tax obligations that you will have to face

• Equipped with handling logistical challenges one might come across

• Precise and straight-forward pricing

• Not to forget, an established reputed player is good at what they are doing and has a track record to fall back on, which is why they hold the prime market position.

The Burst of Start-Ups and Fall of Some

As an industry, logistics & delivery business has tough entry barriers. This makes it difficult for new entrants to come in the market and survive without timely funding. Like it happened in the case of Chhotu, a Delhi-based e-commerce logistics start-up that had to shut its operations as they were unable to raise funds. Strict regulations, enormous investment in huge machineries and rigid traditional business models are few of the roadblocks that put a break on logistic start-ups.

But technological know-how and boom of Indian ecommerce is creating space for new-age logistic players and make their presence felt. Delhivery, Ecom Express, Holisol Logistics and UrDelivery are few such start-ups that have managed to pave their way in this industry. In a feature published on YourStory, co-founder of UrDelivery, Manjeet shared, “We Indians simply love sale and discount. The recent boom in sales figures of almost all the e-commerce companies can validate this statement. However, it has also been noticed that with increase in sales figure, frustration of customers pertaining to delivery commitments over the web also increases. That was the Eureka moment for UrDelivery.”

Benefits of a start-up logistic partner:

• Economical delivery rates as compared to established companies; viable for small and start-up ventures

• Innovative added benefits such as free trail offers, supply chain management. (For eg: UrDelivery promises to deliver shipment in 24 hours. If they fail to do so then they don’t charge the etailer.)

• Technologically advanced features such as Real Time Tracking, Transit Warehouse Management System and Transport Management System gives start-ups an edge over traditional players

• Eager to prove their mettle so would offer better deals and service

While we listed out the benefits of both, established as well as new players, the customer reviews suggest that there is a clear demarcation when it comes to their target market. For instance there is thread on Quora that is dedicated to Delhivery’s incompetency to deliver their Snapdeal, Myntra and Flipkart orders on time.

This indicates that recognized logistic companies like Bluedart are best suited for big online shopping portals that do bulk business and rely heavily on timely delivery. Whereas small businesses that sell or has to ship few items daily can take advantage of new logistic players.

Unexplored Opportunity

In the race of Start-up VS Established Logistic Players, there is one window of opportunity for both. That is penetrating unexplored cities and suburbs! With mobile shopping picking up, India serves as a HUGE potential market for online shopping. Everyone has a Smartphone these days and can place an order from anywhere. But it is unfortunate that several states in our country don’t fall under the deliverable area of almost all leading online shopping sites. Catering to this demand is not easy, may be not feasible too as of now. Lack of infrastructure and entry restrictions add to the woes too. But massive opportunity lies there without any doubt as the glaring demand is there to see for everyone. If companies can manage to crack it open and enter populated remote cities, then there will no dearth of consumers and Indian ecommerce will grow at light speed so will the logistics industry!