Understand How E-Commerce Supply Chain Works - Logistics - Startup Guide By Nayan Bheda

[Music] [Music] [Music] but to me to people my name is apuro monkey I'm CEO of my company called web Express we are into supply chain and logistics for last 10 years plus and we have been associated with advantage for the point of view of explaining the entire area of e-commerce in supply chain so let's start the session I'm sure all of you are very much aware of e-commerce and what's happening in a lot of good sessions have happened so while we talked about getting this 500 million people online and the technology which will help us to do that or the marketing strategy which may possibly get you there but the biggest problem in e-commerce of course how will you make your goods reach them and that's where the entire supply chain comes in it is actually much more easier to spread an e-commerce initiative like an airline looking for example or a railway booking or cinema booking because what you get in result is an intangible you get an SMS or you get an email which you can show at a theater these days and just walk into the cinema hall there is nothing to be delivered to you and that's why what we call as industry where you don't have to have any tangible to be delivered it's much more easier to crack and that's why the e-commerce industry in India for that is very bigger compared to the physical goods industry but what we talked about ecommerce right now is of course something which will come to my home something which will come to my home in a physical package from some point and that's why the entire world of supply chain comes in so one of the biggest challenge today for e-commerce companies is going to be how are they going to make it possible to reach out to 500 million plus people in the country and in time with a product which does not lose its quality and integrity and is the product which you actually ordered online a trailer of that of course is today available to you because all the urban areas you are able to get that you order something online and it reaches you normally in 3 to 4 days or maybe five days of time and it reaches you in the same shape and the right product most of the time there are of course instances of things going wrong so let's understand how this entire ecommerce supply chain industry works and we will do that by taking case study of one of the leading companies in this particular area this is a company which is quite a very interesting story it's a company by the name of NGO Javas it's one of the leading what we call is ecommerce only logistics company in India somewhere in 2012 when jabong comm started as a brand in India they felt that they must have a division to control the logistics like so many other companies did at that point of time and that's how they created this division within them called goes ours but over time they realized that it's a special entity and the core business of jabong is to sell fashion material online and e-commerce is logistics is something which is not the main company should be worried about and that's where a separate company was hired off called quick Dell logistics and separately invested into by many investors and became a brand name called NGO Javas today NGO Javas delivers more than one and a half lakh on an average consignment per day and they serve more than almost 6000 to 6500 pin codes in India of about 17,000 good pin codes that you can serve as far as India is concerned and they have got more than 8,000 Plus bikers who go every day from various locations that they've got come to your home and deliver stuff so this is a generation of companies which we call as new generation ecommerce logistics companies companies which did not exist before ecommerce boom they have not been around for 25 years they've been around for only maybe five six four seven eight years and they've been serving the e-commerce market mainly now if you look at the graph from a growth point of view you will notice that the growth in e-commerce for this company has been very stupendous from somewhere near to zero in 2012 every year they had almost a 200% 300% growth and today they stand at almost a level of more than one and a half lakh consignments being delivered every day in Diwali last year they touched a peak of 3.6 lakh deliveries on a single 360-thousand in any given day and that's a very massive volume for and that's only that's not the only company while we are taking the case of this particular company and that's not the only company the industry itself did very very well so imagine managing 360,000 deliveries and you are still catering to only a small percentage of the e-commerce market probably about 10 to 12 percent of market share is what Co Javas will hold or was holding at that point of time equations of course change in the industry and new players keep on emerging which means if you want to grow to a much larger level of 3 X 4 X 5 X obviously your capability to deliver will have to go up much much more as I was sharing with you there is a new generation of companies which have come up so there is a company by the name of for example dot dot which is a division of DD DC and exclusively focusing only on e-commerce logistics then you have a company called delivery you have a company called EECOM Express a company by the name of Express B's in fact recently both these companies were in use because Alibaba is shown a lot of interest to invest in this space it's very simple logic that if you want to control ecommerce you must control logisitics because apart from delivering the product what exactly do you do as he commerce company you have a fantastic website you have a great catalog you have got a good vendor base which will supply the material and I'm sure you know a very strong advertisement and marketing engine but unless you don't control logisitics the only experience the customer actually has of you is when that package comes to his home and when he opens it and that is a moment of truth unlike your traditional retail companies where you have a shop you have many queens you got some other things going on you got AC and you got food so many other things the retailer can throw in into a small or a shop to attract you where is an ecommerce company whatever attraction they give you a partial discounts ultimately what comes then delivery to you and that's why these companies understood the importance of e-commerce delivery as compared to normal traditional delivery and especially form you may ask a question why is it that India did not have the autistics industry before you is it that before that people did not get things delivered we had courier for so many years we send an envelope from one place anywhere in the country to the other it does reach unfortunately that industry was not very well geared to serve the e-commerce industry in many which ways let me explain how if you took it look at a very traditional courier company or look at your postal department typical time they will take to turn around an envelope from Mumbai to Delhi is seven days they will first take envelopes from lot of people then you go to a post office or a branch office sort it all because you may pick up everything from let's say Andheri West but all the envelopes picked up in Andheri West do not go to Delhi East some go to Chennai some go to call gothis you have to do a sort Asian this audition then you know gets done across the city it goes to one particular point where separate bags are created for Delhi Chennai etcetera something which is going to Delhi may not lend at Delhi it may go to Louisiana so you have this entire business of sortation etcetera to be done and that takes time and doing that particular requires a lot of manpower a lot of effort and India being relatively cheaper country for labor most of this work was done manually so this audition will actually be done by human being reading it Delhi Mumbai if you go to a courier office they've got something called as a pigeonhole right many many small boxes and there are people who worked there for fifteen ten twenty thirty years were exported you give them a box of envelopes and like machines they will read and sort short short short shorter and put into that pigeonhole and that human being is like fantastic he's been doing it for fifteen years twenty years and he knows how to do it he literally has those pigeon holes mapped into his brain he looks at Delhi I say Chennai and it falls into the right slot kind of thing so we typically replace machines with human beings and the human beings will work for many many years become like machines but that doesn't really help in e-commerce because one you have got different size of parcels right and you're competing with the retail industry where you can go and buy something next door and get it right now so seven days is something which is not acceptable especially in metro markets where consumer has a lot of choice most importantly many of these companies did not really understand the concept of cash on delivery because a courier comes to you delivers the envelope and there he goes job done right nothing to be collected unless it's a money order or some you know kind of acknowledgment required courier where he will wait and then you will sign something which he will take in you know go back he will just give it very quickly run away you are you are talking about delivering something which is expensive and you are supposed to collect the money of that expensive item back in terms of cash on delivery we will of course talk more about cash on delivery as we go ahead but it's a reality that cash on delivery is a must in e-commerce without which you cannot go forward so these companies realized that today's logistics companies are not much geared towards it secondly most of them already had business so when I am starting my e-commerce company I'm just one e-commerce customer for you today we are talking about industry being twenty billion dollar and you know five billion and going to 20 billion big numbers but in 2008-9 when Flipkart started almost every logistics companies showed them the door because they demanded a service level which nobody will commit they will tell them Flipkart I will deliver your material from Bangalore to Delhi in anywhere from seven to ten days and I cannot even guarantee that and if I am not able to deliver in 10 days for whatever reasons I will not pay your penalty and if you want to find out where your package is why don't you go to my website and check it out if Flipkart wants to ship even ten thousand shipments every day do you really feel they will put up a manpower will go to probably website of FedEx and you know aeramax and blue dot punch in one by one take the data put it into some excel sheet and then when you call from your home saying where is my package look up that excel sheet and then give you the answer will it work it would never work and Flipkart realize that very early on that the current logistic state of India will not serve them so Flipkart formed its own company called ECOT and they said we will do our own logistics taking a cue from that all these so many other players also came into the market to serve this particular industry what they do how they do we will talk about it a little later today if you look at the market share there are fundamentally following categories of players there are of course the companies which are courier and logistics which got into e-commerce seeing the action and the amount of business so blue dots of the world and AeroMax of the world and FedEx of the world obviously put their act together once they saw the growth coming in and they put the systems and processes and they are competing in the market they account for a fairly large chunk of e-commerce players then there are what we call is captive ecommerce logistics companies ECOT for example is a captive of Flipkart now recently they've started talking about giving business or taking business from non Flipkart customers but that will remain a small percentage most of the businesses will still come from their own parent which is Flipkart go Java's the example that we had talked about was a captive of jabong and now Snapdeal so put together these two will account for majority of the business for go Java's that's why they are called captive detail captives and then there are what are called as independents delivery EECOM express express bees ship rocket many of them who are formed basically to serve the e-commerce industry you go to them and say I want his envelope to be delivered to my sister in Delhi they'll say thank you we don't do that business they don't do retail they don't do envelopes they don't do business for non-ecommerce companies they are focused only on e-commerce companies because they do feel is their strategy that there is a huge growth left in the e-commerce market why should we look at anything else of course those assumptions are changing today but then even after all that there is a pie chart which in a way indicates that FedEx and Blue Dot today controls almost half of the ecommerce delivery market and the remaining half is being controlled by other people like dot sort or gotti or others of course depending on whom you ask in this industry numbers are always difficult to confirm right because there are no really fundamental research done in this logisitics industry overall and in India because market share information is available mainly from anecdotal evidence by calling suppliers or by calling you know companies like e-commerce and they will tell you there is no really a government number available for such things can't really say it's a great thing so you have a questions we need talking about this market share as of today the entire e-commerce percentage is still less is still figuring in that 24 percent for example ecard gavazzi calm delivery and all these guys are actually catering to the e-commerce site so ecommerce businesses so are they figuring in that 24 percent so which means blue dot and fedex are still serving the market so courier and other logistics so this is the market share of only the e-commerce logistics within that blue dot and aeramax and others are significant players one of the reason is that they always were present though their service levels were not good but they were the only people present so you had to go to them they have very strong large networks which they are able to leverage much faster whereas everybody else is ramping up the network for example Gotti is around for 25 years right blue dot 25s FedEx in India in FedEx Forum maybe about 80s but in different form is AFL for example which is what they acquired 25 years plus so the number of branches they've got number of people they've got is very large so for them it's very easy the problem was that they were not very very open to do a customized service for e-commerce players so these new players upstarts came in like ECOT or a go Java sort of dot dot or in EECOM and they change the service level and captured 50 percent of the market and that made obviously the traditional players change their game so dot sort for example is being counted as a part of Korea logistics company because it's a division of DT D C and D TDC realized that in their own setup maybe they are not able to meet the needs of an e-commerce customer so they invite they formed a separate company called Dodds or to focus exclusively on e-commerce and deliveries thereby improving the service level providing certain facilities and contracts which only e-commerce companies will need but that doesn't mean that the traditional logistics companies are out of this market they also control a good amount of market but then you will also notice that only the top two people like blue dot and you know aeramax and you know FedEx other people who are controlling good amount of market a very large number of traditional logistics companies are excluded the e-commerce market today that also will change one of the reason why these companies also dominated is the way the entire ecommerce supply chain is formed let's understand how that supply chain is form [Music]

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Keywords: E-Commerce Supply Chain, e-commerce supply chain management, e-commerce supply chain challenges, supply chain management in e commerce in hindi, How E-Commerce Supply Chain Works, how supply chain works in ecommerce, How to Start a Startup, How to Start a Startup Company, How to Start a Startup Business, Startup Guide for Entrepreneurs, Startup Entrepreneur Guide, Entrepreneur Guide, Startup Guide, Entrepreneurship Keeda, Logistics, logistics in e commerce, logistics tutorial

Id: 3ef_BdXEGtw

Length: 16min 15sec (975 seconds)

Published: Sat Jan 26 2019