Change in Ekart’s delivery model; How does it help Flipkart?

Experimenting with logistics is not a new concept at Flipkart. Remember a year ago when the marketplace started an unusual partnership with Mumbai’s dabbawallas for last mile delivery? They still use their services even today!

This year in March, Ekart, their logistical arm, caught the bug and partnered with 300 pharmaceutical outlets from Apollo for better logistics. These pharmaceutical stores will serve as pick up centers for consumers to collect their packages.

Logistics is a challenging aspect of Indian ecommerce due to the complexities of location, costs and delivery speed. So dabbawalls and a few hundred pickup spots aren’t enough to build an efficient logistics system.

Piloting a New Logistics Strategy

Ekart is testing out the viability of automated lockers in tech parks. Online consumers will be able to collect their packages from these lockers in office buildings at a time convenient to them.

Flipkart’s last mile operations Vice President, Neeraj Aggarwal said, “This is an early-stage experiment for automated lockers, supported by Qikpod’s tech. Now customers who get package delivered in offices need not worry about when the delivery boy would come.”

Ground Rules

  • Automated locker facilities will not be extended for COD orders.
  • Consumers availing of this facility will need a unique pin to access their packages.

Inspiration from East and the West

In the West

This form of logistics very common in the West. Lockers are set up in 24/7 supermarkets and stores for convenience. Ekart is the very first to bring this concept to India. In countries like America, etailers team up with stores like Target and Walmart. Online shoppers who aren’t available during working hours can easily collect their packages from the lockers set up in these stores.

In the East

Chinese etailers like Alibaba use grocery stores to cover last mile delivery. Alibaba uses an app to incorporate grocers to their network, giving them an additional source of revenue.

The Secret to a Good Pick up System is Kirana Stores!

Ekart has another delivery model. According to this one, the logistics firm will be delivering packages to kirana stores located in residential areas. In turn they will be able to make multiple deliveries a day.

Neeraj Aggarwal stated that each kirana store they have currently partnered with makes 25-30 deliveries a day. This equals 7% of total deliveries across the country. They want to increase this percentage to 25% which should take about 3,000 kirana stores to achieve.

Consumers using this service are happy about it. As for the partners enabling the delivery service, well they have nothing to complain about because Ekart gives them a commission based on their delivery numbers. Given it is a source of extra revenue, with zero investment, Ekart has managed to partner with around 700 Kirana stores from 28 different metropolises.

The Challenges of Partnering with Kirana Stores

This alternative method of delivery has a few challenges of its own, says Alvarez and Marsal Managing Director, Manish Saigal. There are rental costs and investments that must be considered. These expenses only make sense up to a certain degree.

Allowing reverse pick ups, where consumers drop off the product to the kirana store, is a smart approach, Manish Saigal advises. Enabling faster reverse pickups through kirana stores is something Ekart is considering and will provide soon enough.

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The Current Pick up System in India?

Flipkart Experience Zones

In metropolitans, consumers not being at home to receive their packages are not an issue because they provide their work addresses. In 2015, Flipkart launched experience zones, from where consumers could pick up their deliveries when they found convenient. These few pick up centers by Flipkart even allow instant returns and on-the-spot demonstrations for particular products.

Amazon’s Partnership with Kirana Stores

Amazon started the pick up system in India in 2014. Their pick up facility uses rental space like vans and local stores to cover last mile delivery in metros and non-metros (like Belgaum, Tanjore and Kolhapur). Amazon has at least 2000 stores from 50 cities in its pick up network. They enable same day, one day, two day, release day and even Sunday deliveries in selected cities.

Jabong’s Partnership with Kirana Stores

Three years ago, Jabong tied up with kiranna stores and paan-beedi shops. However, they were unable to make their logistics flourish. So now the fashion etailer is developing an omni-channel strategy for its logistics.

Will this New Delivery Model Work?

In three years time, Flipkart wants to be 10 times larger than it currently is. So the mere manpower derived from 10,000 delivery boys will not be sufficient. Increasing the work force will only push the marketplaces expenses adding to its losses.

Using Ekart’s new deliver model will allow them to manage on limited delivery staff. Ekart will be using, pharmacies, kirana stores and pick up centers at tech parks to complete last mile delivery. Right now these methods amount to 14% of deliveries but in time they are expected to reach 35%.

Neeraj says, this strategy is not aimed at saving costs, but scalability.

Flipkart is certainly dedicated to the cause. The marketplace has teamed up with mapping specialist MapmyIndia in order to build a GIS (geographical information system) and location-intelligence platform. This will help them build a highly-scalable and efficient logistics network. With the addition of Ekart’s new delivery strategy the marketplace should be able to work its way towards reduced delivery costs, speedier delivery and a more enriched customer experience.

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