E-commerce 'sale days' create havoc for logistics players
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"The entire e-commerce game is being played on sale days that lead to sudden spikes in orders. During these days, they (e-commerce companies) want us to deliver thousands of packages to the most remote destinations within a couple of days, because that's what they have promised to their buyers," the head of a leading e-commerce logistics company said requesting anonymity.
"We cannot hire delivery boys for one week when the demand is high due to sales and then pay them salaries throughout the month, when there's no work."
While several e-commerce players have in-house logistics capacities, most of them partially depend on third-party vendors. Among others, Snapdeal does not have a captive delivery unit and relies on private courier companies completely.
While Flipkart delivers 65-70% of its orders through its captive logistics unit, e-kart, it works with logistics players for the rest. Amazon, which is also working to strengthen its delivery capacities, currently has a significant dependence on third-party vendors.
Holding discounts on dedicated days have been the mantra for boosting sales for most of the leading e-commerce players in the country over the last few months. The trend started when Flipkart saw an unprecedented response to its Big Billion Day in October 2014. The company had said that it clocked a revenue of $100 million in only 10 hours on the day of the sale.
Post the Big Billion Day success, Snapdeal hosted a 'Savings Day' in November, while Amazon India had also hosted 'Diwali Dhamaka' sale during the same period.
"We believe that at the time of signing the contract, most organised players make their capacities and limitations clear to the client. After that, if there is a sudden spike in demand, you cannot suddenly pick up delivery boys from the street," Vijay Kumar, chief operating officer of Express Industry Council Of India, a body representing privately run courier companies in the country.
"The e-commerce industry is at a nascent stage so obviously there are certain lags."