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The e-commerce logistics space is expected to cross INR 492.4 Bn by 2025. A key driver would be the rural populace comprising 2/3rds of India’s population that would adopt e-commerce in a big way. Further, we can expect to witness rapid scale-up of technology in the likes of IoT, data analytics, AI, GPS-enabled robots, drones, RFID, etc to track inventory, streamline the supply chain, and enabled automated delivery with detailed updates. Be it running a successful e-commerce website or becoming a logistics powerhouse, the key is to get the basics of order fulfilment right- warehousing and inventory management, packaging, shipping and after-sales care.
Prioritizing customer needs
Customers have certain paramount requirements from an e-commerce vendor. Firstly, their preferred goods should ideally be in stock, and the delivery needs to be on time with receipt of quality, undamaged products. The below diagram captures an overview of the critical steps in the order fulfilment process:
The following are the critical elements that can help an e-commerce website ace the delivery game:
1. Warehousing and inventory management
The courier picks up the ordered products from the warehouse, where they are stored. It would be prudent for the e-commerce player to opt for an efficient automated inventory software. This needs to be linked in real-time to the website to ensure that products actually available in a particular godown are displayed as in stock on the website. Key points that an inventory software should ideally include are:
- Real-time tracking of inventory till the nuts and bolts level
- Reorder level setting indicating its time to refill to avoid an out of stock situation
- Centralised management of SKUs, product categories, and variants within each group
- End-to-end integration with your e-commerce website and technology infrastructure.
- Analytics into inventory at hand, suppliers and costs of items, courier agencies and pricing, shipping charges etc
Though it is said that one should not judge a book by its cover, often external packaging highly influences the consumer perception of the product and the brand. Post pick up of the goods from the storage point and prior to the shipping, the packaging stage assumes significance. The packaging needs to reflect the nature of the product. For example in the case of breakable items, the label fragile and handle with care needs to be mentioned.
• Technology as an enabler: Further, the packaging needs to be handled by experts with sufficient cushioning to ensure that the final product delivered to the end -customer is in a good condition. Having in place detailed barcoding and RFID mechanism would ensure that the correct address details and product descriptions are mentioned on the cover.
• Costs depend on size: The freight charges are proportional to the size and weight of the goods that need to be shipped, along with the distance to be covered. Often, packaging companies maintain standard sizes of packaging material i.e. boxes, mailers, customized holders, crates etc with multiple options in branding and subscription offers based on bulk shipping, frequency and nature of goods i.e. high value or delicate items. Lightweight packing materials might be light on the pocket as well and offer superior cushioning during the transit phase.
3. Managing the Shipping function
Often e-commerce websites include shipping options for the customer to choose from. Along with added transparency, this step also enables the customer to opt for prompt delivery, with extra charges in case of urgent requirements. In many sites, it may be mentioned that normal delivery may take about 3-5days and express or priority delivery would result in delivery the next day. Under shipping, some other important considerations are:
• Shipping software: Many e-commerce websites have tie-ups with logistics partners or courier agencies. Here, the selection of the vendor needs to be made after thorough due diligence of the reputation, costs, and quality aspects.
• Printing facility Further, some third-party vendors offer plug-and-play software that when integrated enable the customer and the e-commerce player to know the status and the accurate expected delivery time. Some of these software products have features that enable the printing of customised messages to high-value or frequent customers, For example, certain e-commerce merchants especially D2C brands to maintain a personal touch with the customer print personalised greetings on the labels or if the product is to be delivered as a gift.
• Advanced Order Management: Certain SaaS or cloud-based players offer real-time information of the shipping charges based on distance (km) to be covered or location of the warehouse etc, along with value-added services offered. For example, whether the goods were damaged by floods and are unfit for delivery to the consumer etc. Certain carriers offer insurance on the goods.
• Home delivery vs in-store pickup: Besides shipping costs, another criterion would be whether the e-retailer would prefer to do home-delivery or arrange for the customers to pick up the goods. A study indicates that same-day delivery is turning out to be a big draw amongst customers estimated at $1.35 Bn in 2020 alone.
› Ship to Home directly: Here, the products are delivered to the doorstep of the customer
› Ship to store: In this case, if the e-retailer also has a brick-and-mortar presence, the customer may choose to pick the items from the physical store. This is suitable in case there is no one at the customer’s home to receive the goods.
4. Customer service
This is another critical aspect that can impact brand perception and in turn repeat purchases by customers. An e-commerce player must focus on having a robust customer service mechanism with a 24*7 toll-free number mentioned on the website, where all the queries of a customer or grievances related to the quality of the product are looked after. It may be that the customer is dissatisfied with the quality or has changed his/her mind about buying the goods. In such a case, a system that manages the return, exchange or refund aspects needs to be in place. Negative customer reviews on social media can be devastating for the business and result in loss of potential revenue, especially a nascent e-commerce business that has just started operations.
There are multiple aspects that need to be managed while launching one’s own e-commerce website. The key is to get the basics right and the rest will follow. Further, one needs to track the market scenario and keep one’s ears to the ground to pick up competitor actions and changes, to constantly meet customer expectations.