Bottlenecks in E-Commerce By Prashant Bhatmule, VP SCM CPG, Bajaj Electricals

Bottlenecks in E-Commerce

Prashant Bhatmule, VP SCM CPG, Bajaj Electricals | Tuesday, 11 April 2017, 05:16 IST

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In developed economies, e-commerce logistics is the biggest driver of change in the physical dis­tribution networks, which has evolved substan­tially over the past 45 years. As e-commerce continues to grow, most shippers, particularly multi-channel shippers, are only beginning to work out what this will entail for their distribution net­work infrastructures.

Key Trends

In the coming years the consumers are expected to com­plete most shopping journeys via multiple devices like smartphones as shopping continues to gain ground and persistent acceptability. Selling would definitely increase during big online shopping days, resulting in decline of visits to malls/retails stores; merchant retailers will see a web influence on their in-store sales. Marketing will shift from being device fo­cused to people focused; making advertising ads more relevant and non-intrusive with digital marketing as a key factor for suc­cess. Instant delivery services will become common—expectations on service will have no limits.

Return trends are degrowing, with more of corrections in the process of selection and multiple filters being ap­plied on incoming quality/variety etc, the service in this scenario asks for a faster response. Singles Day, celebrated in China was the world's biggest online shopping day of the year, with Alibaba alone reporting sales worth $14.3bn, a sixty percent increase from last year. These big online shopping days will get even bigger. With the coming in of GST, facilita­tion of e-commerce industry has grown even though it calls for a certain part of centralisation. GST is going to play a major role in expansion of E-commerce industry.

These all are leading to increase e-commerce business disproportionate to the current scales.

Role of Automation and Technology in E-Commerce Supply Chain

The boom in the Indian e-commerce sector could be at­tributed to the enhanced use of technology, which has helped improve e-commerce in areas across the supply chain, inventory management, improved customer ex­perience and loss prevention. From an increased us­age of mobiles and tablets, the availability of COD services, superior technology platforms, inventory tracking and automated fulfilment centres, etc. have all been driving factors of growth in this sector.

More than 50 per cent of the orders for e-commerce retail giants are generated via mo­bile applications. In this context, the COD option has been instrumental in driving retail e-commerce growth in a developing market like India, with low penetration of debit or credit cards or even bank accounts to make online purchases; features such as ‘online only discounts’, coupons and free shipping facilities help in expansion of e-commerce. It has also led to an increased usage of mobile wallets in the country. One of the largest players in the mobile wallets market in India has more than 104 million us­ers who carry out over 75 million transactions per month.

API integration of e-commerce system with the 3PLs system

The success of e-commerce retail business is dependent on the speed of supply chain. Data transfer for 3PLs is cur­rently manual via e-mails, with little to no integration in the supply chain. In the near future, we can expect to wit­ness an increase in usage of API and system integration between the e-commerce retailer and 3PL for real-time and an uninterrupted exchange of data and information, for immediate action and query resolution.

Reverse supply chain - Integration of systems

Returns management is a key challenge with e-commerce retailers providing options of try and buy, and a return policy of seven to 10 days. The automation on this would help avoid losses. While India has an internet user base second to China, only 14 percent of the total internet users shop online in India, as compared to 30 to 35 percent in Brazil and Russia, and 55 percent in China. Order fulfil­ment will be a big focus for retailers, with many offering delivery options to match Amazon’s Prime Now service. Faster delivery at lower charges will also drive growth of cross-border shopping as consumers won’t mind buying from other countries to save cost and time.

Opportunities in E-Commerce Logistics

The coming years will be amazing for e-commerce in­dustry, as consumers increasingly use multiple devices for online shopping and mobile transactions. The 3PL may get consolidated partially, but with the over intent of in­creasing 3PL opportunities to meet the inflated demand in years to come. The different challenges could be cat­egorised as procurement/inventory management, custom­er order management, logistics and shipping and returns, replacement and refunds. With the upcoming trends in automation, these challenges can be easily overcome.

The path forward

The sustained growth of over 50 percent in the Indian e-commerce retail sector underlines the need for ‘efficient and sustainable logistics operations’ for various sizes of e-commerce retailers in India. The growing prominence of the market-place model and the increasing penetration of e-commerce are likely to alter the way e-commerce lo­gistics function in India. A combination of delivery speed, upgraded warehousing infrastructure, better service ca­pabilities, technological advancements and innovations could be some of the most haves for the e-commerce LSPs in the long run.

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