E-tail giants, Amazon and Flipkart, began preparations to double their offerings and logistics chains early last month in preparation for India’s largest and grandest annual festival, Diwali.
In a vividly competitive spirit, the industry behemoths expect a neck to neck battle to maximise wallet share. The expected volume in sales could alter each company’s overall market ranking. Flipkart, for instance, announced that its festival sales would triple gross revenues and double its lead on Amazon. During a five day Diwali sale last year, Flipkart sold 15.5 million units while Amazon sold 15 million units. Their revenues and reckonings have been within a hairline of one another as each pledges robust attempts to corner the market.
Head of Amazon India, Amit Agarwal, announced that Amazon has extended its handling capacity by 100% since 2016 to ensure that “two Amazons” serve customer needs this year. The e-tailer doubled storage and logistics capacity to 13 million cubic feet and doubled its resellers to 2.2 lakhs.
Despite cash crunches and economic slumps ushered by GST implementation glitches, consolidated revenues generated by the season’s largest sales including Flipkart’s The Big Billion Days, Amazon’s Great Indian Festival and Snapdeal’s Unbox Diwali are expected to touch INR 9,000 crore – a 40% spike from last year’s numbers.
Along with the expected increase in demand comes the added challenge of overworked last mile delivery channels. Dinesh Goel, Cofounder and CEO of Asaanjobs, an HR portal, spends much of the festive season matching delivery personnel with e-commerce companies who fight over limited supply. Same day and two-day delivery systems often bottleneck conventional logistics facilities, forcing even the most established companies to seek out urgent temporary help. The hodgepodge process of pulling in thousands of delivery agents, often young workers like students or underemployed individuals looking to make a few extra bucks, inevitably leads to delays, inconsistencies and damaged goods.
In 2014, Arvind Singhal, chairman of Technopak, the New Delhi-based retail consultancy observed that last mile deliveries had surfaced severe cracks in e-tail logistics: “The single weakest link to the growth of e-commerce business in India in the next three years is the inadequacy of the logistics and the last-mile link”.
Over the last three years, logistics giants like DHL, e-commerce leaders like Amazon and even private equity firms like Warburg Pincus have committed to rollout over $1 billion in consolidated investments to fund India’s logistics sector. Tech-enabled solutions, an integral component of this development, have further automated and advanced supply chain visibility through machine learning algorithms and predictive analytics. Resource planning and management is no longer a game of estimation and 11th-hour life hacks, targeted data can scientifically identify location-based demand to forecast key operational metrics including warehousing requirements and transportation schedules.
This Diwali will test the results of e-commerce logistics expansion and organisation over the last three years.
To learn more about how scalable and cost-effective solutions can simplify logistics, contact Numadic. We build integrated solutions designed specifically for the supply chain industry. Through real-time visibility and machine learning, we help transporters and consignors identify anomalous activity, reduce operational overheads, cut delivery times and prevent pilferage and theft.