The origins of e-commerce in India can be traced back to the 1990s but e-commerce has gained popularity when Flipkart started operations in 2007. The current smartphone revolution and internet literacy have played a vital role in popularizing e-commerce applications such as Amazon, Snapdeal and Flipkart, It, however helped to address the major problem of retailers i.e.‘Customer Reach’. India has the second largest Internet usage base with broadband penetration of approximately 40 percent. The total number of internet users in India stands at over 500 million or close to 40 percent of the Indian population, yet the share of e-commerce in total retail revenue is just 11 percent in the 7 major cities.
Market share of e-commerce in total retail revenue is quite low, but growing at great pace. E-commerce retail has revolutionized the lifestyle of Indians, from how they shop to what they shop.
Logistics students of Kairos Institute, the best logistics academy in Kerala, have conducted a survey among public and has collected data from alumni of Kairos Institute who were placed in Amazon, Snapdeal and Flipkart. The following are the major reasons fuelled the growth of e-commerce in India:
- Unlimited access to Internet and smartphones,
- Attention to marketing,
- Easy shopping,
- Easy payment options,
- Time savings,
- Market updates,
- Mind blowing deals and discounts and
- The rapidly changing lifestyle
The e-tail market size that stood at approximately $3.1 billion in 2014 is expected to be a $72 billion market by the end of 2019.
The market is dominated by the top three players (Flipkart, Amazon and Snapdeal). They control almost 90 percent of the market share in the industry. These large players have diversified their product offerings and are continuously expanding it to have a greater footprint on the industry.
Logistics in E-Commerce
The movement of a product from a seller to the buyer in the e-tailing scenario involves several stages. These processes have ensured steady growth in the e-tail logistics and thus developed the flexibility and scalability of the whole system. These processes are listed and briefly discussed below:
First-mile Logistics: Goods are moved from the sellers and transported to the e-commerce retailers’ hub. Post the arrival at the hub, the product is checked against the transport receipt, following which, the product goes through a strict quality check, before it goes on to the shelf. Thereafter, inventory is updated through the Warehouse Management System (WMS), which reflects in the stock report generated.
At the Mother Hub: Post first-mile logistics, the product lies on the shelf until fulfillment, which involves sorting, picking and packaging of products. Once the order is placed on the website, a pick list is generated, and the order is picked, the products are packaged, categorised and moved to the mother warehouse, from where they are sorted for last-mile delivery. Consequently updated in the WMS.
Line Haul: The process involves linking the fulfillment center with the distribution/ dispatch center, via road, rail or air, subject to the most efficient transit time and costmatrix.
Last-mile Logistics: This phase involves the dispatch and shipping of products from the delivery/ dispatch center to the end customer, from where they are shipped out to the customers. This leg of the entire logistics chain is dependent on manpower and infrastructure in terms of the number of delivery hubs, delivery vans and bikes.
Reverse logistics is “process of planning, implementing and controlling the efficient, cost-effective flow of materials, in-process inventory, finished goods and related information from the point of consumption to the point of origin for the purpose of recapturing value or proper disposal”.
Product returns is another important part of E-Commerce. Reverse logistics happens because of two reasons: customer initiated and logistics failure. The returned products are cycled back into the inventory, restocked and re-listed or sent back to the seller due to quality issues. These involve process such as refund, exchange and replacement. This will complicate and will increase the cost of supplychain. The e-tail consumer today also has the option to cancel his purchase even after the product has been dispatched from the dispatch center.