India’s e-commerce opportunity is a logistical challenge

India is a country of great opportunity for online retailers. However, like many other Asian countries, infrastructure, reliability and costs are hindering the growth of e-commerce.

Despite the issues retailers must face in India, it is estimated the country’s e-commerce market was valued at $14bn in 2012 compared to $6.3bn in 2011. The growth is expected to continue as more online start-ups enter the increasingly populated space to meet the needs of price-conscience consumers seeking bargains and an expanded selection of goods.

While logistics providers such as Aramex and Blue Dart offer warehousing and delivery solutions to online retailers, the costs and limited delivery points associated with these offerings are prohibitive to many retailers as well as to consumers that pay for delivery services. As such, new logistics and delivery service providers are popping up. For example, DTDC Courier & Cargo, an express courier company, launched its specialist logistic company for e-commerce- DotZot. According to the company, it will be the first pan-India delivery network with a reach of over 8,000 pin codes and 2,300 cities, focusing exclusively on the e-retail space.

Sanjiv Kathuria, a former TNT executive and current CEO of DotZot said, “E-retail needs a focused, different and innovative approach for order fulfillment. DotZot will be decisive for merchants who are looking at growing and retaining their e-powered customers. E-commerce customers are becoming increasingly demanding and a great delivery experience is the key differentiator that e-retailers can provide.”

Another recent example is Ecom Express, launched by former executives from Blue Dart only last month, which already has operations in 36 cities. The company plans to expand to 500 cities within three years. According to Ecom Express, large courier companies have limitations when it comes to retail consumers, but one focused on the e-commerce sector has advantages. “If a buyer wants to try four pairs of shoes, logistics can be managed better by a niche company. We can dress our staff in the portal’s brand; speak the same language as the brand to give customers a unified experience.”

To address many issues associated with last-mile delivery, Chottu was launched in 2011 and provides its services only for e-commerce clients. The company offers a proprietary shipment tracking system and often times delivers within 24 hours.

As the Indian e-commerce market continues to grow at a rapid rate, many online retailers face logistics challenges such as the cost and management of warehousing, timely delivery across the country, the handling of various payment options and the technology to combine and manage each of these supply chain components. New solution offerings such as those from DotZot, Ecom Express and Chottu are a good start and may provide partnership opportunities for larger logistics providers.

Ti’s e-commerce series

Ti is publishing a series of reports on the e-commerce logistics market. We have already published reports on the market in North America and Europe. We will soon be publishing Asia Pacific e-commerce Logistics 2013. For more information regarding these reports or to register your interest for the upcoming new release, contact Matthew Campbell at [email protected].