A Complete Guide about eCommerce Logistics in India
With 100 million Indians now opting for the online shopping experience, it can be said unequivocally that the ecommerce industry in India has been on a steady rise. Alongside it, we have seen exponential growth in the ecommerce logistics industry as well. In this article, we’ll go through how the ecommerce logistics industry has evolved, what it consists of today and how ecommerce businesses can keep expenditure low and order fulfillment high with the help of innovation and technology.
Overview of Ecommerce Logistics
The ecommerce logistics industry is a pillar of support for online businesses across the country. This has led to a sharp increase in the resources and initiatives used by logistics companies all across the country. In fact, revenue from the ecommerce logistics sector is expected to account for nearly 30% of the total revenue of the logistics industry.
The journey of logistics begins with the rise of the eCommerce logistics industry itself, which first appeared only after the 1970s. By the 1980s, retailers stopped relying solely on suppliers to fulfill orders and started to make use of centralised and accessible distribution centers.
The 1990s saw the onset of globalization and a heavy shift towards international suppliers which further increased the number of distribution centers relied on by retailers. By the time the internet made its debut in the early 2000s, the logistics industry was a well-oiled machine. But every machine eventually needs upgrades.
When ecommerce businesses began to flourish in the second decade of the 21st century, the logistics industry finally entered the digital era. A whole new sector of the industry was developed and called eCommerce logistics. This sector continues to thrive and grow with the help of innovations to drive up order fulfillment percentages for online businesses and keep 100 million customers happy.
How Do Ecommerce Logistics Companies Work?
Ecommerce businesses have a very specific goal: To maximize order fulfillment while providing customers with a pleasant delivery experience, free of unnecessary frustrations and anxiety. Ecommerce logistics companies play a huge role in ensuring your business reaches this goal. These companies are charged with handling the end-to-end delivery of all your orders, from the warehouse to the customer’s house.
Reliance is placed on 3rd Party Logistics Companies (3PLs) to provide the various services encompassed within the delivery process, starting with the moment an order is placed until the final delivery. There are 5 major functions 3PLs serve when it comes to ordering fulfillment.
1) Inventory Storage and Warehousing
Many 3PLs include storage, inventory management and access to warehouses amongst their services. Making use of a logistics partner's warehouse can greatly reduce the time spent on packaging and pickup of orders. Some ecommerce logistics service providers may charge extra or be unable to do pickups from vendor warehouses. Using warehouses and storage facilities supplied by logistics providers simplifies the process greatly.
2) Order Creation and Manifestation
After your business receives an order from a customer, that order has to be created on the logistics partners' platform and then manifested. Manifestation includes the creation of the order by the logistics partner, followed by the generation of the AWB (airway bill), printing the shipping label, preparing the order for packing and delivery, and then assigning a delivery agent for pickup. These are all functions controlled by the concerned logistics partner for each order.
3) Transit and Tracking
Transportation is one of the main services provided by logistics companies. Many maintain their own fleet of vehicles or outsource vehicles from other 3PLs which can impact the size of orders that are to be delivered as well as the smoothness of the delivery itself. It’s important to keep track of orders even while in transit so customers can be given regular notifications on the status of their orders. Some logistics providers use GPRS-enabled vehicles which enable ecommerce businesses to give their customers real-time tracking updates and address issues to reduce delays.
4) Last Mile Delivery and Exceptions
Most logistics providers have in-transit warehousing facilities to store goods at a point closest to the delivery destination. The last mile of delivery is the phase between picking up the order from its in-transit storage location and its final delivery to the customer. During this phase, numerous delivery exceptions can arise, like the shipment getting stuck or delayed mid-transit, or the delivery attempt failing.
Failed delivery attempts can occur for a wide variety of reasons, like if an incorrect address or contact number was provided by the customer, or if the customer was unavailable at the time of delivery. How a logistics service provider handles such exceptions can have a huge impact on RTO% and profitability.
5) Reverse Logistics
Returns are an unavoidable part of e-commerce businesses. But if handled correctly, they can be used to your advantage. Providing a smooth returns service is one feature that attracts many customers to Amazon. Almost all ecommerce logistics service providers offer mechanisms for reverse logistics.
Some provide more streamlined and efficient services that allow the reverse journey of each order to be tracked thereby reducing the likelihood of orders getting lost or damaged during the return journey and keeping ecommerce losses to a minimum.
List of Top 10 Best Ecommerce Logistics Companies in India
For every ecommerce business, maximum order fulfillment is the main goal. Given that logistics partners are almost entirely responsible for ensuring your business reaches its goal, your choice of logistics partners is extremely vital to functionality. So, go ahead and check this Clickpost compiled list of the best eCommerce logistics companies in India along with other necessary details.
Aramex began its journey into logistics in 1997, originally being launched in the UAE and serving as a global carrier. It has a reach of 220+ countries across the world. It has been operational in India for a little under a decade, after being acquired by Delhivery, another major logistics service provider (also included on this list). Aramex India is well-known for its highly efficient international shipping services, which include express import and export. Domestically, it also provides services like express delivery, order tracking, order bundling, bulk deliveries, COD (cash-on-delivery) services and even co-packaging.
Blue Dart has been providing logistics services and solutions on a global scale since 1983. It manages a large network of well-distributed fulfillment centres, manned by 12000+ employees within India. The biggest benefit of tying up with Blue Dart is that it provides you access to 35,000+ pin codes across the nation. It also offers e-commerce businesses an opportunity to make use of specialized delivery services to optimize the delivery experience for customers, like scheduled and slot-based delivery, express delivery, Cash-on-delivery as well as Collect-on-delivery payment options and weather-resistant packaging. You can also verify each delivery through an automated system that provides proof of delivery on fulfillment.
Delhivery is an India-based logistics company that was founded in 2011. It has since grown to one of the largest domestic logistics companies, with a customer base of 10,000+, 75% of whom have established ecommerce enterprises. So naturally, it is a must-have on the list of top 10 logistics services providers in India It has a reach of 18000+ pin codes and can handle both forward and reverse logistics with ease. Delhivery also provides COD services in addition to express delivery, next-day delivery, same-day delivery and slot-based/scheduled delivery. Delhivery is also equipped to handle a wide range of goods from heavyweight and high-value products to dangerous items.
DHL is a global logistics company with a wide distribution network that enables it to serve customers across 220+ countries in the world, and 26,000+ pin codes in India. DHL courier company is known for its highly efficient delivery services as well as its warehousing services that are ideal for SMBs. In addition to scheduled delivery, it also offers services like Collect-on-delivery and customisable packing. One of the biggest advantages of DHL is that it is the perfect logistics partner to reduce your environmental footprint by limiting wastage during delivery.
Ecom Express is a 2012 Indian logistics startup that is a favorite among ecommerce businesses that deal in high-value goods, like jewellery. This is because it offers secured delivery services which include regular surveillance. Its express delivery services come with a guarantee of delivery within 72 hours. The same promise is also maintained for reverse logistics. Returns are also subject to a doorstep QC (quality check) prior to beginning their reverse journey. It provides its services to 27000+ pin codes in India.
Ekart is an important part of the illustrious history of the eCommerce logistics industry. In the late 2000s, when Amazon and Flipkart began to grow dramatically as online shopping gained popularity, these companies realized they needed their own in-house infrastructure to handle logistics. Ekart was therefore born as an initiative of Flipkart to serve its customers. This logistics service provider has since expanded to provide logistics services to a wide variety of eCommerce businesses. They provide same-day delivery services in 13 cities and next-day delivery services in 50 cities across India, serving 3800+ pin codes.
FedEx is a large logistics company that has been operating globally for many decades but in India for only a little over 1. The name is well known both domestically and internationally, as are its services. These services include express delivery, overnight air delivery, secured transportation and finally specialised handling. This last service enables them to handle a wider variety of goods, from heavyweight and lightweight products to high-value items and even hazardous materials like lithium batteries.
Gati was founded in 1989 and is still considered one of India’s pioneer logistics companies. It offers various forms of express delivery services, the most popular of which is its same-day delivery service, which promises that orders placed in the morning will assuredly be delivered by the end of the very same day at 9 pm latest. It offers ecommerce businesses warehousing options in addition to offering pickup from 3rd party warehouses in accordance with the needs of the online businesses. To ensure you always have money in the bank, Gati promises COD remittance will be completed within 2 days.
Rivigo is a 2014 logistics company based out of Gurgaon that operates almost exclusively as a freight marketplace. It specializes in using technology to ensure freight and transportation services develop efficiently. This led to the brainchild of Rivigo, a process known as Relay Trucking.
This process requires truck drivers to hand over the wheel at certain designated pit stops and relay points located a few hundred kilometres from the drivers’ original cities. This enables truck drivers to avoid exhaustion and spend more time at home, thereby boosting efficiency.
ShadowFax is a 2015-launched startup based out of Bangalore that is appreciated among ecommerce businesses for its highly efficient reverse logistics services. Over 100 major domestic and global brands make use of Shadowfax and its many delivery services. These services include hyperlocal delivery, express delivery, slot-based/schedule delivery, pickup and delivery validation for orders, GPS enabled tracking for transportation units and finally COD reconciliation in real-time. It has a reach of 7000+ pin codes in India.
What are Different Types of eCommerce Logistics Costs?
With so many delivery functions being handled by logistics service providers, expenditure for logistics services can be extremely high. This can greatly impact the overall profitability of your ecommerce business. Tracking costs is a task that is just as vital as tracking orders. Knowing what are the different types of eCommerce logistics costs that may arise can go a long way in helping you reduce them as it gives you the knowledge you need to negotiate the best deals with each of your logistics partners and to work alongside them to improve efficiency.
1) Fuel Surcharge
Fuel surcharges are an almost unavoidable cost for most ecommerce businesses and logistics companies that handle trucking, freight and transportation services. This operational expense covers fuel costs that fluctuate frequently, and it is typically calculated at a base rate in accordance with order volumes, so you can use your predetermined freight volumes to negotiate an index within which this surcharge rate must be calculated. This keeps the fuel surcharge rate limited and thereby less likely to suddenly impact your ecommerce business with a heavy financial burden. Route optimization can also help keep fuel costs low in general.
Labour costs consist of handling fees, packaging fees, COD handling fees, and restocking fees among many others that may potentially arise. There can be costs levied for loading and unloading inventory, for stocking shelves or managing product numbers, for shipping label printing, for order pickup and even for in-transit storage.
Labour costs essentially refer to any type of costs associated with physically handling the goods and they can arise at any point between storage of goods and final delivery. The rates and circumstances under which these costs can be levied should be determined in the initial contract to avoid sudden extreme costs arising.
3) Value-added services
Value-added services have a much greater value than you’d imagine when it comes to logistics services. These value added services include features like efficient NDR management, Returns management, and benefits like security and insurance that certain types of orders may require. Each of these services may have its own heavy costs depending on the resources utilized. However, these costs can also be pre-negotiated and bundled together with overall shipping costs or other logistics costs to give you a good deal.
4) Mandatory costs
Mandatory costs in logistics include government fees, customs fees, and value-added tax. All of these are unavoidable costs, as the term mandatory would imply. Government fees and customs fees, however, can be reduced through careful planning, strategic business management and taking the help of specialized logistics partners to navigate through customs clearances.
How to Keep Ecommerce Logistics Costs Low?
Costs must be maintained at a reasonable rate to ensure your bottom line isn’t negatively affected. When you’re aware of the different types of logistics costs that your ecommerce business might encounter, negotiating with carriers becomes an easier job. But beyond ensuring low rates with logistics partners, you can actively work on reducing your costs. This can be done through a few strategic measures. The below written top 7 solutions to reduce eCommerce logistics costs will prove beneficial for you in saving money overall.
1)Choice of Logistics Partner
Choosing a logistics partner is one of the most important decisions you will make for your ecommerce business as that will determine the efficiency of delivery services, the expenditure for said delivery, and the customer’s entire post-purchase journey. Accordingly, the choice of logistics partners has to be made strategically keeping in mind your business priorities, your resources, and the trajectory of growth for your business. For example, if your business deals with jewellery and high-end products, tying up with a partner like Blue Dart or Delhivery or any other courier partner that specialises in security for high-value shipments can reduce your overall logistics costs and improve customer satisfaction.
2)Identify and Monitor KPIs
Some of the biggest losses to ecommerce businesses come in the form of stuck shipments, delayed deliveries and delivery exceptions resulting in RTOs. Actively monitoring these different possibilities and the various reasons why they occur can help you determine alongside your logistics partners the best way to address them. For example, if your business faces frequent delays in deliveries to certain remote areas, it may be more feasible to tie up with a different courier partner to reach remote areas due to a lack of connectivity and expand the scope of your current logistics partners to areas where their service is more efficient. This can only be done if the causes for the delays have been identified and sufficiently monitored.
3)Revisit Carrier Contracts
No contract is absolutely permanent. Most contracts with logistics partners are valid for a specified period of time and are also subject to amendments and changes as per your business needs. Tying up with a logistics partner requires you to build a relationship with them and a part of that is pushing forth improvement initiatives in the contract. So after maybe 6 months of tying up with a logistics partner, you can revisit the contract and make active changes based on the delivery exceptions and KPIs you determined need to be addressed. You can place limits on the number of stuck shipments, fake deliveries, delayed deliveries, etc., and if these limits are crossed, a contractual penalty can be imposed on the logistics partner to ensure they are held accountable for the same.
How Can Technology Help Improve Logistics?
The detailed discussion about "how technology is transforming the eCommerce logistics" is well written in the below Clickpost blog. Logistic partners are entirely responsible for every customer's delivery experience. 3PLs essentially hold within their hands the life cycle for each of your orders.
While monitoring the delivery process might be more effective when logistics are handled by an in-house infrastructure, building such an infrastructure is a time-consuming & costly task. Profitability can be best maintained through the use of 3PLs. 3PLs can provide the best services only when they make use of the latest technological advancements efficiently.
1. Improving Courier Selection Process
Once you’ve tied up with the logistics partners of your choosing, an additional choice-based task arises when it comes time to assign a logistics partner to each order. AI-driven recommendation engines help immensely here, which is why everyone from logistics aggregators to multi-carrier logistics platforms all make use of them. There are 2 ways these AI-driven engines can work. Firstly, they can take into account certain fixed metrics like dimensions of the order, pickup location, delivery destination, and price to determine the best logistics partner. Logistics intelligence platforms like ClickPost maintain the second type of AI-driven recommendation engine, which can be configured to take into account your business priorities, like reducing RTOs or delayed deliveries, when determining an efficient logistics partner for each order.
2. Automated Order Manifestation and Tracking
The process of order manifestation has multiple steps, starting with the creation of the order on the logistics partners platform, generation of the AWB and shipping label, then finally picking and packing the order. All of these steps can be automated through the use of APIs (Application Programming Interface), reducing the amount of manual effort required. Logistics intelligence software like ClickPost gives ecommerce businesses a single API to handle the entire process of manifestation, cutting the work down to just a few easy steps for your business. APIs are also used to automate sending tracking updates and notifications of order statuses to customers. Using push and pull APIs, like ClickPost does, ensures double the efforts are put into receiving data from logistics partners to ensure your customers receive real-time updates and are never left in the dark about the status of their order.
3. Identify Delivery Exceptions
As we’ve established, monitoring delivery exceptions and other issues that arise during delivery can go a long way in reducing your costs and maximizing order fulfillment. Using GPS-enabled tracking systems and tracking courier API integrations with each logistics partner, you can determine exactly what causes various delivery exceptions. Without the use of technology, over 50% of SLA breaches go undetected and therefore, unaddressed. Identifying and monitoring these breaches enables you and your logistics partner to actively implement measures to reduce the same.
4. Manage NDRs Efficiently
NDR Management and Returns management are two extremely vital functions of the delivery process. An NDR (non-delivery report) is what is notified to your business when a failed delivery attempt occurs. Most logistics partners have an in-built system that pushes multiple reattempts at delivery. If all reattempts fail, the NDR is classified as an RTO. Using communication gateways and APIs, NDRs can be dealt with more efficiently to reduce the number of RTOs. As soon as a failed delivery attempt occurs, customers can be reached out to with issue-specific queries, requesting information like details on the delivery location or contact information. APIs then push this information to the logistics partner so the next delivery attempt made will be an informed one and therefore more likely to succeed.
Logistics and ecommerce go hand-in-hand when it comes to creating a streamlined and smooth shopping experience for customers. Together, they bring all the benefits of shopping online for the sake of ease and convenience, serving a huge chunk of Indians. But fulfilling a multitude of online orders on a daily basis is no easy task, which is why businesses make use of eCommerce logistics companies, shipping aggregators and logistics intelligence platforms. This gives them the perfect blend of optimum delivery services, ease of implementation, monitoring capabilities and technologically enabled solutions to maximize fulfillment, keep their customers informed and happy, and build their brand.