The Indian eCommerce market recently saw its homegrown poster boy Flipkart register its first US$ one billion in annual revenue almost a year ahead of the company’s own projections. Venture fund Accel Partners is overly optimistic that the Indian eCommerce market, currently generating US$ 2 billion in annual sales could grow to over US$ 8 billion, by 2016.
Although this may just be investor hype, there is no doubt that online retailers are finding new ways to scale up business in India’s difficult but fast growing retail space. Facing major challenges in reducing the delivery cost and time, they are trying to co-opt small retailers to help them execute last mile deliveries faster. Several initiatives planned by internet sellers Amazon, Flipkart, Snapdeal and eBay could change the way a small bookstore functions or a kirana shop does business in India in conjunction with the same eCommerce that was earlier seen as their nemesis.
Handholding for warehousing
Market leader Flipkart started this trend by training sellers in making displayable eCatalogs for uploading on its web site. Now they are introducing training modules for small retailers to understand better packaging and modern concepts of location-based warehousing and inventory management. The training works two ways for the online
retailer — apart from expanding its footprint by getting more retail units on its marketplace, it starts using the retailer’s manpower and space to manage the last mile of the supply chain. To create a typically Indian cost- effective solution, online retailers may need to co-opt low cost personnel operating from small kirana shops in the cities and rural areas rather than lavish IT parks. Similarly, training retailers to develop location-based warehousing within their own premises is less expensive than investing in mammoth state-of-
the-art warehouses as is the current global trend.
Other eRetailers such as Snapdeal which has more than 20,000 registered online sellers on its eMarketplace imparts training through video as well as written communication — quizzes to ascertain the success of the lessons. eBay’s training covers the managing of an entrepreneur operated digital sales module that includes taking pictures, cataloging and uploading images, creating listings, managing ratings, feedback, storing, accounting, billing and calculating fees. There are over hundred eRetailers in India today and with the prospect of attracting venture capital, each is pushing a strategy to reduce delivery time and cost — the biggest challenge for the industry.
Handholding for last mile delivery
One of the biggest issues for India’s unstructured markets is the correct location of the consumer and last mile delivery. Buyers live in a variety of un- signed and un-numbered houses and roads and lanes in large and small townships making deliveries tedious and uneconomical. Unlike the venerable and established postal system, Google maps and most couriers fail in this context. Although rural roads and transport are notoriously unreliable and courier companies cannot reach the vast hinterland, the ubiquitous red vans of the Indian post office make at least a weekly trip to the most remote areas.
Amazon delivers through the India Post to 140,000 post offices in 28 states and 7 union territories. An alternative way of reaching consumers in difficult
and more remote areas is through the existing supply chain of small retail and kirana stores that supply consumer goods.
Amazon has planned its business accelerator model to co- opt and train these small time retail and kirana stores in its supply chain. Small entrepreneurs manning Amazon kiosks for last mile delivery are also being tried wherein it will pay a small fee to the neighborhood kirana shop owner. A win-win relationship between small retailers and the eCommerce giants could enlarge the retail footprint and the quality and volume of goods delivered.
