Comparison of independent logistic partners in India

When you are doing an e-retail business in India, where the total serviceable pin codes are little over 25000, providing last mile “free” logistic is in itself a over commitment towards customers. And if you add that unimaginable cost towards reverse logistic (RTO), you will have a clear picture regarding one of the key reasons for bloodbath in e-commerce space. Whenever you search for review of any player be it new or old, one major problem that is equivocally stated is default on delivery time and state of package. Reputations and ROI on huge marketing expenditure are closely knitted with the “Wow!! Factor” that you deliver to your customer. So the million dollar question is that on what parameters you will choose your shipping partner and how they perform on these parameters.

  • COD  and Prepaid Serviceability
  • Top reasons stated by courier companies for RTO
  • Average TAT by logistic partners for first delivery attempt

Figure 1: COD and Prepaid Serviceability

COD  and Prepaid Serviceability

Once in a conference, I was listening to a prominent market leader stating the fact that orders from tier 2 and 3 cities are increasing at better rate when compared to metros. Major reasons stated were, the access to premium brands and authenticity of products. The question is do their logistic partners also share the same dream. Following bar graph shows the reach of major logistics partners (COD and PREPAID).

Average and 85%ile time taken by logistic partners for first delivery attempt

To benchmark the service quality of the different providers, we have compared average and 85%ile of the total time from dispatch to first delivery attempt. Clearly companies who have started as specialized ecommerce last mile delivery partners are doing significantly better over others.  Companies like JAVAS,  Chhotu have close to a day of average TAT for first delivery attempt and 2 days TAT for 85%ile numbers.

Figure 2: Average and 85%ile time taken by logistic partners for first delivery attempt

The data supports the emergence of localized players and their commitment towards timely delivery. At the same time among the players with greater footprint in serviceability, Bluedart is a clear winner.  Most of the orders served by them were on the customer’s doorstep by 5th day.

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Top reasons stated by courier companies for RTO

Now we will take a look at other important component of this discussion – RTO. Data shows that sometime people order items just for fun. This accounts for 45% of RTO. Now, here is a major grey area. Are people actually refusing to accept or my courier delivery guy never reached the address? This is tackled currently by different e-commerce player by cross checking RTO’s. Some of them are doing random calls to customer, while others ask delivery boy to arrange a call between a refusing customer and the company executive.

Figure 3: Top reasons stated by courier companies for RTO

Established players in market like flipkart, myntra, homeshop18 and many more have taken a strong stand against this problem by setting up their own delivery network. There is minimum basket size on which free home delivery is done and they monitor the performance for every delivery. But the bigger question is, are you ranking your logistic partner frequently and for each transaction? Don’t you want to know who is a better partner when you are sending high value items via COD? Do you trust same partner with both fragile and bulkier goods?

Answer to many of the questions asked above is automation of performance monitoring and courier allocation process to the extent possible through the use of technology. There are companies in the market who now provide technology to support such automations but an important evaluation criterion should be configurability of the product according to your operations and not vice versa.

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(Original Contribution by Unicommerce )

  • Luckylaxmi

    Great Blog. helps to understand better logistics in ecomerce

  • Nagalaxmi

    Very informative article. The calculations are very good to understand. thanks for sharing

  • HarryLee

    Informative article!! Its the best example of real face of Logistics in eCommerce. I totally appreciate with the information with graphs.

  • V Govardhan

    What is the source of this data? Also, the way the data is captured and analyzed by various companies also varies significantly, I am not sure if someone has done the normalization/clean up of the data before sharing it.

    • iamwire

      Comparisons are based on 2 million data points (shipments) chosen from multiple e-commerce companies across all major verticals.

      (Data Contribution by Unicommerce )

  • Lohit

    The information provided about Blue Dart is wrong, Blue Dart has the highest COD / Prepaid service availability

  • CMV

    The % of total orders that are RTO & % of articles damaged/lost by carrier is not covered. Is that not an important reason for e-tailers bleeding. This study seems to be designed to sell the most expensive carrier (BD) to gullible & inexperienced managers.

  • Vastradi

    Forget about COD and return rate etc. Please let me know who Has the lowest rate of damage and loss of courier packet itself !?

  • Anubha Khanna

    A very nice and informative article by Ankit and team.

    I believe another important aspect that anyone planning COD business should consider is the speed & accuracy with which the COD cash is remitted back.

    The frequency of transfers with most players is 3-5 times a month, whereas JaVAS remits money back every banking day of the month. i.e. the frequency is 18+ times a month. This unblocks a huge amount of working capital which can further help fuel aggressive growth.

  • Anand Balkrishna

    The service level for delivery depends on familiarity with the product/brand company and the delivery systems. eCom players should ideally choose their partners who are right for their product categories and then allow some time for familiarizing with the products. There is a clear distrinction between document courier companies, document & parcel courier companies and parcel express companies. Their linehaul & delivery systems are mutually exclusive.

    The promise for free delivery & COD is of the eCommerce company. You cannot hold the LSP responsible for returns and its rate. Shape is bound to change if you dont choose the right partner for your product category.

    Automation is simply inevitable. The invoice & docket number should be integrated. Have some sanity checks like voice record or camera record of customers who are rejecting. This adds to analyzing the reasosn for rehection and also reducing such anti elements who do for the fun of it.

    Stop blaming one another and bring about a Business Partnership culture. Industry transportation spend (B2B) is 2-6% and eCommerce is 12-15%. eCommerce is witnessing 20-25% due to high returns. Invest that money in a near to market location, one warehouse per state. Sell the front lists through these sites and back lists through you rmother warehouse. Natuarally customer has more patience for back list and your RTO costs for 80%of your sales is reduced to nil.

  • Andrew

    Good article to understand the real picture of logistics in e-commerce.

  • Avinash Kalro

    Everybody beware that if you quote that you are an ecommerce startup to logistics service providers you will be charged a premium and the quote will be per 500 gms and fuel surcharge will be extra. Tell them you are a regular brick and mortar firm dealing with x product. You will be given regular rates.

    • Harsh Bhatia

      Hello Avinash

      The rates are higher for E-Commerce firms because they use air freight as a medium for faster transportation of goods rather than the conventional surface mode of freight.

    • abhijit

      Avinash’s point is bingo !!
      you can explore to reach the destination thru conventional menthods before pretending to gain “competitive advantage” by being few hours earlier than the rest. and as time passes by consumer will not be in such a great hurry as he is today, primarily due to the tall claims made by the e-tailers.