Supply Chain: New Age Delivery
The pandemic-induced lockdown not only forced the adoption of e-behaviour for consumers (more time spent online—education, shopping, banking, groceries, gaming, video, and what not) it also accelerated the adoption of machine learning and artificial intelligence in the supply chain management in the past 18-months. And that perhaps is the key reason behind the boom in e-commerce transactions and the growth of Direct-to-Consumer (D2C) companies in the past two years. How? We will just explain.
Chances are you may or may not have heard the following names—Pickrr, ClickPost, Shiprocket, Shyplite, Ezyslips, Delhivery, or Eshopbox. Have you? These are the new-age, tech-enabled logistics and delivery platforms behind the rapid growth of e-commerce and D2C companies today, say experts. These ventures are connecting the e-shoppers to e-businesses much more efficiently, quickly, and at far lesser costs than the traditional logistic players thanks to machine learning, AI algorithm and various other modern technologies
While these e-logistic companies work in the background, several of the D2C players have become recognisable brands for the new-gen online shoppers. Brands like Wow Skin Science, Mama Earth, Lenskart, SUGAR Cosmetics, BoAT, Go Noise, Licious, and Country Delight, among others are clocking mindboggling growth thanks to the e-logistics players who are silently enabling a boom in D2C, e-commerce and Internet-based businesses.
Before we get to the operational advantages of the e-logistic players, it is important to understand how the D2C companies work in tandem with the e-logistic companies.
How does it work?
There are more than 800 of these Direct-to-Consumer or D2C companies actively operating in the country today. Of these, over 100 D2C players have together raised in excess of $ 2 billion in the past couple of years alone. They sell virtually (through their website or app) and also through popular e-commerce websites like Amazon, Flipkart, etc. Often, they have no physical stores. But they tend to deliver to all major cities and towns. How? In comes these new-age, tech-enabled logistics and delivery platforms.
Of the 640 million Internet users in India, nearly half are millennials who are actively engaging with D2C to order cosmetics, clothing, gadgets, appliances, consumables to everything possible. They shop instantly and then demand the spoils of their shopping even quickly. In fact, today’s e-shopper wants the products delivered within hours (between 4 hours to 24 hours; sometimes a little more) and not in weeks. This is made possible by e-logistic players like Pickrr, Shiprocket, Eshopbox, and others.
Well, the lockdown-induced closure of physical stores post-pandemic contributed much to the mushrooming of D2C companies and in turn their partners, the e-logistic players.
e-Logistic Boom
Take the logistics start-up Pickrr for example. It started as a logistics service provider only to evolve into a “growth enabler” for D2C brands. Here we are using Pickrr as an example to explain how the process works.
Says, Rhitiman Majumder, Pickrr’s Co-Founder and CEO: “Pickrr has served D2C brands to reduce their RTO (return-to-origin) rates by 3-4 per cent and their overall logistics costs by 20-30 per cent.” This is very important to better understand their success stories. RTO is about sending a product from the customer back to the seller’s address on request by the customer (if the customer is not satisfied or products fail to fulfill the promise as advertised or for any other reasons). The costs involved to bring the product to the customer and then back on return-order are now losses to the seller. But it is an extremely crucial aspect of e-shopping today—buying quickly, trying/sampling the product, and its return. A large part of the success of e-shopping is the ease of buying and the ease of returns.
Pickrr’s platform helps e-commerce businesses simplify shipping and/or the returns. It dispatches, manages and tracks orders (or returns) through a single dashboard. It works with leading shipping partners across India like Blue Dart, Ecom Express, DTDC, FedEx, Delhivery, India Post, Shadowfax among others. Pickrr is backed by global impact investors like Omidyar Networks, Guild Capital, Marquee angels, and global business veterans. The company says its SaaS (Software as a Service) platform acts as a virtual logistics arm for its clients and recommends the most efficient delivery partner that can take care of all the hassles including picking up the product and shipping it to any destination. Pickrr’s automated solutions let sellers integrate seamlessly with their online shops on Shopify, WooCommerce, Amazon and 50-plus channel partners and ship through 20-plus logistics providers directly. In fact, Pickrr claims to be India’s first virtual courier service for e-commerce sellers, resellers, online sellers, SMEs and D2C brands who want a seamless shipping experience.
Another example is Gurgaon-based Eshopbox. It caters to more than 50 D2C high growth brands like Canon, Being Human, Bioworld, and others. It has been working to provide a full-service solution to store inventory at warehouses near customers and ship orders with improved transit times and shipping costs. In return for the optimisation, Eshopbox charges a monthly subscription fee of Rs 15,000 for allowing usage of its platform and services inclusive of order processing and storage charges. The return on investment is likely to grow once more brands come on board. Currently, Eshopbox is clocking an annual recurring revenue (ARR) upwards of $3 million.
“Traditional supply chain management is rapidly becoming obsolete,” says Mayur Karwa, Co-Founder & Director, Eshopbox because more supply chain functions are quickly getting automated. “Companies must either invest or outsource in order to move ahead,” he adds. Access to digital tools provide visibility into real-time supply chain data and automating end-to-end workflows dramatically reduces the need for human intervention, Karwa adds.
Agrees Harsha Razdan, Partner and Head, Consumer Markets and Internet Business, KPMG in India. “The D2C model has become a model adopted by many companies to address the changing consumer demands during Covid-19; with a demand surge for D2C models, companies across the globe are rushing to streamline their supply chains to secure immediate operations,” says Razdan. One of the causes of inefficiency in the traditional supply chain is having different business units in the linear chain that are making decisions in isolation. Lack of centralised data further adds to their inefficiencies.
In comes these new-age, tech-enabled smart e-logistics start-ups. Their AI-backed algorithm isolates and decentralises units and removes them from the entire supply-chain equation and brings everything in order—from order getting placed online, locating shipments, timing the shortest delivery duration, automating the packing-to-pickup-to-delivery while showcasing everything in a real-time dashboard. This obviously gives these e-delivery players a significant upper hand. And everyone gains – the consumer gets their favourite products delivered quickly, eTailers can track and analyse demand, supply, feedback, etc. And it becomes a win-win for all.
Shiprocket is another such player clocking over 214 per cent year-on-year (YoY) increase in the number of D2C sellers on its platform. In fact, Shiprocket claims a 107 per cent increase in YOY volume of shipments. “As opposed to February 2020, there was more than a 273 per cent increase in the volume of shipments done YOY by D2C women sellers. Shiprocket also observed that a majority of the D2C orders came in through social media platforms including Facebook, WhatsApp, and Instagram,” says Saahil Goel, CEO & Co-Founder, Shiprocket. “The Shiprocket’s platform currently has more than one lakh sellers onboard and processes over five million shipments per month.”
D2C growth prospects
By relying on the D2C business model, personal care brand Super Smelly recorded a sharp increase in revenue and a whopping growth of 174 per cent in the first two quarters of 2020. Widely known D2C name, Mamaearth, recently closed a $50 million funding, valuing it at $730 million and thus becoming one of the most valued new-age D2C brands. Ayurveda brand Upakarma Ayurveda, clocked a 100 per cent YOY rise in turnover for the past three years are among scores of such mega-growth story in the D2C segment powered by the new-age virtual logistics and supply-chain management start-up firms.
Digital India initiatives, roll out and expansion of GST network, and soon to be out National Logistics Policy are some of the key developments that will further fuel growth. “With relaxed FDI regulations and a favourable regulatory environment, ease of starting a business is further attracting the investor community to fund these innovative startups,” Razdan of KPMG adds.
In fact, Delhivery, one of the leading e-logistic companies is set to launch its initial public offering (IPO). Experts peg its valuation at $4 billion as it plans to offload a 10-15 per cent stake for around $500-600 million (roughly Rs 3,500-Rs 4,200 crore). In fact, most of the listed logistic companies have seen a big uptick in their stock prices recently due to growing investor interest.
The smart e-enabled new-age tech logistics, shipping and data management logistics start-ups are the next big thing for sure. With the resounding success of the D2C category, more players would be encouraged to seek alliances with these start-ups in order to multiply revenue.
