Leading ecommerce company Paytm is looking at putting Rs. 500 crores in its fulfilment centres, in a bid to bring down the delivery time. While the company is operating on a no-inventory model without warehouses of its own, it has partnered with companies for warehousing purposes.
Paytm has 13 third party fulfilment centres presently. Sudhanshu Gupta, VP of Logistics at Paytm explains why the company is not planning on having its own warehouses,
“When we strategically work with partners with profit-technology integration, we are able to scale up faster and the costs are borne by the customers or sellers.”
Geo tagging to reduce delivery time
The company is working towards identifying sellers closest to the buyer’s location via geo tagging. This move is intended to cut the turnaround time to as low as two to five days. Gupta opines that the main cause of expenditure in logistics is the fact that the consignment travels long distances. He spells out the ways by which Paytm is working towards reducing logistics expenditure,
“For sellers who have warehouses across India, we have developed algorithms which select product origin which will lead to lowest delivery cost.
We now also have 16 fulfillment centers in top tier 1, and tier 2 cities, so that the shipment is always being shipped from the closest possible location to the customer.”
The company also plans to ‘expand’ on its $ 10 million investment in Loginext, a logistics data startup.
Paytm also has seller incentive programs to motivate their sellers. The company’s strategy to keep its logistics costs low sounds fairly workable. The third party warehousing can help create the ‘marketplace only’ spirit.