With the onset of the festival season, many e-commerce start-up companies have discovered how to survive and grow in a season marked by increased online shopping: outsource their manpower and logistics needs for last-mile deliveries.
Interestingly, those in this last-mile-delivery business are, themselves, like the start-ups they serve! Delivery vans and delivery boys are an integral part of these business models. To meet the scaled up requirement and ensure timely deliveries, these players are outsourcing their additional bandwidth requirements. Such services are relieving e-commerce players of the additional burden of seasonal hiring. Some of these start-ups are often cubicle-headquartered firms, with shoe-string budgets and skeletal staffs.
With e-commerce set to penetrate further in Tier-II and III towns and cities thanks to the ongoing expansion of 3-G mobile telephony, the manpower and logistics needs of online marketplaces have increased. “We don’t have a logistics arm and, therefore, use third-party logistics for shipping our products”, Vishal Sharma, Vice-President, ShopClues.com, told BusinessLine .
ShopClues has outsourced its requirements to nearly 30 logistics companies with tie-ups at the local level to reach out to its online customers. In fact, it is focusing more on Tier-II and III destinations as transaction traffic is set to increase from there. “From a 20-25 per cent month-on-month increase, we expect a 70-80 per cent increase in growth by Diwali this year,” he added.
Sharma said these local logistics partners decide how many delivery boys and other infrastructure they would need for last-mile delivery. Typically, a delivery boy is expected to deliver 30-40 orders a day. ShopClues received 15 lakh orders in August 2015 and is expecting a 180-190 per cent increase by Diwali.
Online major Paytm has completely outsourced its logistics needs to more than 20 “external logistics partners”. The company, with nearly 50,000 sellers on board, charges no listing fee. It, however, typically charges between 2 and 10 per cent of the transaction value from the seller, which includes marketing fee, payment gateway charges, and actual logistics charges — the last one being transferred to the logistics partner.
“From our normal 15-20 lakh transactions per month, we expect an increase of two to three times by Diwali as the business from Tier-II and III destinations has increased significantly,” said Saurabh Vashishtha, Vice-President (Business).
Logistics firm Shadowfax, founded in April 2015, caters to Flipkart, Amazon, Food Panda, and Grofers as their extended arm provides workforce requirements. It currently has a workforce of around 400 employees, including those from rural areas, whom it trained and groomed as delivery boys.
“We provide deliveries in a radius of 5-6 km in Delhi and Mumbai where we are active at present, catering to hyper-local merchants. By September-end, we would reach Bangalore, too, as we see a 300 per cent growth in this sector where we have little competition,” Abhishek Bansal, Co-Founder, ShadowFax, said.
Truck aggregator firm LetsTransport, founded in January 2015, has tied up with nearly 100 truck-owners in Bangalore, and e-commerce firms such as BigBasket and Delivery.com. “Our competitive rates bring new customers to us. For instance, local truck vendors charge Rs 800 for the first 5 km of delivery, while we charge only Rs 350,” said co-Founder Pushkar Singh, a mechanical engineer from IIT-Kharagpur.