There is already a surge for on-demand and instant delivery services across the Indian urban space. With logistics service providers and delivery companies brimming with orders, the strong need for technology-based instant last-mile delivery models has not only improved delivery speed but also optimised utilisation of resources, thereby improving unit economics. In fact, efficient last-mile delivery has become a key determining point as far as customer satisfaction is concerned and all kinds of businesses are evidently looking to provide a seamless and service competitive experience.
Upamanyu Borah
E-commerce in India has truly transformed the way people shop—and providing a fillip to other sectors as well, namely fintech and the logistics industry. While deep-pocketed bigger players have access to logistics in a way that smaller players don’t, last-mile logistics is posing a great problem to solve. And this is where logistics technology start-ups are making a difference.
A big problem plaguing the trucking industry is gross under-utilisation of assets. This coupled with inconsistent earnings and delayed payments render the space ripe for tech intervention.
The on-demand delivery industry is already disrupting traditional markets by adopting a full cycle approach to three essential components of a delivery experience: ordering, pick-up, and delivery. This is receiving a significant boost as businesses today fully adapt to COVID induced changes.
More importantly, these companies are having a set plan to invest locally in electric trucks/vehicles for urban distribution as a sustainable and environment-friendly solution to support urban intra-city logistics strategy and taking steps towards minimising the current high air and sound pollution from which Indian cities are suffering.
According to a KPMG research, 80% of customers today look for same-day shipping. In fact, 50% of shoppers are actually willing to pay extra money for faster delivery. As consumers become accustomed to extremely quick delivery experience, offering shipping options will increasingly become a ‘need rather than a choice’ for retailers.
“To enable last-mile connectivity, digital tools and data analytics also came to the forefront. These tech deployments enable complete and constant visibility of the consignment through GPS installation. Leading-edge technologies like AI enabling predictive analysis of supply chain data, Industrial Intelligence of Things (IIoT) enabling predictive repairs and maintenance, and smart factories are expected to drive the future of e-commerce logistics in India,” said Jasmine Singh, Senior Executive Director and National Head- Industrial, Land & Logistics Services atreal-estate consulting firm CBRE India.
“With online shopping and e-tailing garnering popularity among the masses, end-to-end delivery has become central to an efficient supply chain flow. Identifying the enormous growth potential of e-commerce, many online retail platforms began investing in warehouses to ensure a smooth supply chain,” explained Singh.
Making the Difference
Often, while inter-city transportation has been efficient, the final stage delivery remains a challenge. This is where efficient intra-city logistics and last-mile delivery services are gaining prominence. Intra-city logistics for enterprises is not just about delivering parcels in 30 minutes. It is about solving the actual business challenges.
Innovative technology is the bedrock of a system that efficiently matches the needs of demand and supply to ensure a seamless function together with optimisation of resources and positive unit economics.
“Customer’s expectations are increasing greatly and both individuals and businesses are expected to get goods faster, more flexibly, and in the case of consumers—at low or no delivery cost. As a result, the logistics sector is undergoing immense pressure to deliver a better service at an ever-lower cost,” said Sushil Rathi, COO at Mahindra Logistics.
“In the future, we will witness many breakthroughs in last-mile delivery models and technology integrations, offering greater comfort for the end consumers. The consumers are expecting same day delivery, especially for the groceries and essential items, and hence the concept of hyperlocal delivery business model has emerged. Meanwhile, an increase in omnichannel distribution models especially in e-commerce segment can be observed. A higher level of service integration and a greater adoption of technology would help logistics players in creating the customer value proposition.”
Rathi says they are constantly looking and working towards expanding growth significantly around consumer durables, e-commerce, and pharma.
“We consider them as consumption driven industries. We have deepened our focus by launching new solutions, like return processing, pop-up sort centres and integrated distribution services. These are evident in our continued growth in value-added services and in the e-commerce and consumer segments. The new facilities are developed to sustainable standards and allow us to provide flexible and scalable fulfilment and integrated distribution solutions for the e-commerce industry,” says Rathi.
“Companies should develop ways to interact and deliver directly to consumers,” stated Aniruddha Banerjee, Senior VP- SCM, Spencer’s Retail & Nature’s Basket. “FMCG companies need to focus on omni-channel and flexible online delivery models with a dark store fulfilment setup. Also, the focus should be towards investing more on infrastructure development for a strong last-mile delivery setup. Focus should also be on personalisation of shipments.”
“Companies need to build infrastructure that allows customisation of orders within the supply chain, without adding any cost. Smart supply chain control towers are the need of hour, which can anticipate potential problems in an automated and optimised fashion at a regional and global level,” Banerjee added.
“During the pandemic, we had successfully implemented concepts like Residential Welfare Association (RWA) list for delivery of essential items, such as Fresh F&M delivery in 3 hours, alongside some of the first-in-industry practices like immunity and health advisor programme in collaboration with Dr Lal PathLabs across all the hyper supermarkets,” Banerjee shared.
“Leading players of consumer products have a strong distribution network in rural India. They also stand to gain from the contribution of technological advances like internet and e-commerce to better logistics performance,” he put across.
“Introduction of products with focus on quality and efficacy will be on surge as Indian consumers are highly adaptable to new and innovative results. With the rise in disposable income, mid- and high-income consumers in urban areas have shifted their purchase trend from essential to premium products. Premium brands are manufacturing smaller packs of premium products. All in all, online portals are expected to play a key role for companies. Internet has contributed in a big way, facilitating a cheaper and more convenient mode to increase a company’s reach.”
Bengaluru-based startup LetsTransport provides intra-city logistics solutions using tech, thus enabling truck vendors on one side and solving for businesses looking to have their cargo moved on the other. Founded in 2015, it is one of the largest urban logistics service providers in India. With the aim to improve the livelihood and work environment of the urban trucking community along with improving the efficiency of the sector, the firm has on-boarded 100k+ trucks across India. Currently, the firm is catering to urban logistics operations of 17 cities in India by working across industry sectors such as organised retail, FMCG, e-commerce, distribution, and 3PL companies.
In a bid to drive sustainable growth of intra-city and last mile logistics, LetsTransport recently announced it will augment its electric vehicle (EV) fleet on its platform to 1,000 by June 2022. Having already commenced EV-led operations in Delhi-NCR, Hyderabad, Bangalore and Mumbai, the tech-driven logistics firm will introduce EVs to its fleet in Chennai, Pune, and Kolkata.
LetsTransport has already tied up with 8 OEMs towards strengthening its 100-vehicle strong EV fleet across cities. The primary deployment of these EVs is in intra-city, last-mile logistics for e-commerce, retail, FMCG, and 3PL distribution sectors.
“Local intra-city logistics providers cannot provide a service that outstand the rest. We at LetsTransport have always worked towards adding features that make it simpler for truckers to transact through our application directly, without any hassles. Logistics industry, despite being one of the largest in our country, is very unorganised and with evolving consumer behaviour, last-mile logistics has become a bigger challenge and we at LetsTransport are trying to solve it through our platform,” said Pushkar Singh, Co-founder & CEO of LetsTransport in a media interaction.
“Modernisation and Automation are now getting into almost every industry, and logistics is also not untouched. In fact, logistics per se has been the most difficult industry to implement technological changes, but companies like LetsTransport have transformed the whole domain of logistics.”
“The next big trend in logistics will be the adoption of electric trucks. EV evolution has already started and that will be one of the biggest turnaround for the logistics industry in our country,” Pushkar anticipates.
“With low operational and maintenance costs, we expect EV to play a pivotal role in intra-city and last-mile logistics, and we are well prepared for it. In augmenting our fleet, we are also contributing to strengthening the EV ecosystem by enabling financing of EVs, setting up charging infrastructure as well as enabling a marketplace for resale of EVs in the near future. This in turn will encourage more driver-entrepreneurs to move to EVs as it becomes a more profitable asset.”
LetsTransport is already showing its commitment towards strengthening the EV ecosystem in the country by enabling finance for vehicle owner-operators, educating potential entrepreneurs on the commercial benefits of electric vehicles, and contributing to the charging infrastructure. It is an established fact that the cost of operating a commercial 3-wheeler EV is around 20% of equivalent traditional internal combustion engine (ICE) vehicles. While the EV ecosystem is still at a nascent stage, the sustainability impact and operational costs of EVs are key drivers for early adoption in logistics.
Another Bengaluru-based tech-logistics firm Blowhorn decided to differentiate itself by offering micro fulfilment services. It says to have pioneered the spot and fixed-contract transportation market and is now turning its attention and accelerating initiatives towards speed across logistics offerings. It provides fixed contract-based as well as variable engagement models for large enterprises, SMEs, and individuals. Consequently, Blowhorn remains as India’s first and only ‘full-stack’ logistics company, operating across Bengaluru, Chennai, Delhi, Hyderabad, and Mumbai markets. Full-stack refers to its capabilities in all three elements of the logistics value chain—warehouses, transportation, and tech-enabled systems.
Statistics has it that while most logistics startups have been focussed on shaping inter-city logistics, around 40% of the total supply chain cost is intra-city. Also, there seems to be a clear industry-agnostic trend towards higher fulfilment rates at faster delivery times within cities. Customers are no longer willing to wait for the goods they have ordered. This represents a huge challenge for intra-city supply chains, and a huge growth opportunity for nimble logistics start-ups optimised for speed such as Blowhorn.
“The benefits of technologies reach far, effecting the most basic operations in the supply chain. They provide a simple, yet impressive and impact-heavy approach to delivering optimisation and efficiency. More importantly, leveraging adaptive technologies has proven to increase productivity and profits. Done right, the companies in question have their growth strategy served on a silver platter,” said Santosh Desai, CTO, Blowhorn in a statement to the media.
“In Bengaluru itself, we have several small warehouses, not more than 1000 sq ft, spread across various localities. For consignments that needs some storage or transit, we keep them in these warehouses. None of these consignments stay for more than 24 hours.”
Blowhorn not only uses technology to connect drivers and manage trips but also to manage this inventory. While it aggregates transport partners and drivers, it does not charge them.
“If a driver says he wants to earn Rs 1,000 a day, then our platform will connect him with trips that is relevant, based on the vehicle he drives. Our agreement is with the enterprise or whoever requires the logistics service and we charge them accordingly,” noted Desai.
“We want to provide end-to-end services which include fulfillment services and analytics.”
“With the increasing demands of transaction volumes by end-customers, it is important for firms operating in the logistics and supply chain sector to have reliable, fast and flexible business operations. They have to be ready to create new, innovative delivery solutions to ensure the sales-readiness of their retail network.”
“The COVID-19 lockdown affected the logistics sector and Blowhorn too was hit by it. Our business faced a drastic dip. Driver partners were affected. But it gradually improved. In this time period, we partnered with some FMCG brands which benifitted driver partners as well brought continuous business,” he added.
Assessing the relative importance
Today, it is about building capabilities to seamlessly execute movement of goods irrespective of scale and size.
Major e-commerce players as well as small businesses are today looking to improve delivery time and experience as a critical tool to gain new customers and satisfy existing ones. Hyperlocal players are increasingly witnessing a rise in express delivery, next day delivery or two day delivery. Instant on-demand delivery is another relatively new focus area gaining increasing prominence in recent times. However, executing express deliveries and on-demand requires highly sophisticated logistics and last-mile delivery capability. The relatively nascent logistics sector in India therefore needs to grow at a rapid pace to meet the rising needs of a digital economy. Clearly, an infinite space for last-mile delivery services is emerging in India.
With above, the process of digital transformation in logistics is more than just installing a brand new system or software. It is a collaborative endeavour that needs strategic repositioning of the corporate. Businesses are striving to become more adaptive and customer-centric with the aim being to achieve optimisation in distribution networks. Speed and timing are your best friends in order to gain a competitive advantage, offering reduced time-to-market. This calls for increased agility in supply chain automation solutions—the only way to make a mark in today’s cutthroat and fast-paced market.
*************************************************************************************
