Logistics might pose a threat to Indian e-commerce industry

Industry experts have claimed that India's e-commerce businesses have focused too much on marketing and customer acquisition and not enough on the nuts and bolts of delivering goods.

Their comments came in the wake of the recent "Diwali debacle" as the country's leading online retailers appeared to overreach themselves during the country's peak shopping season and were forced to apologise to consumers for late delivery or, in some cases, non-delivery.

"The single weakest link to the growth of e-commerce business in India in the next three years is the inadequacy of the logistics, and the last-mile link," Arvind Singhal, Chairman of retail consultancy Technopak, told the Financial Times.


His remarks were echoed by Jaspreet Bindra, the former Head of Microsoft India and now an angel investor was quoted in the report as saying. "Logistics is still in its infancy here, and we've got e-commerce coming in and galloping," he said. "Companies themselves haven't really paid as much attention to their supply chain as they should."

Online retailers have invested in warehouse and delivery in the major metros, but much of the explosive growth in the sector is coming in lower tier cities and rural areas, fueled by the spread of low-cost smartphones enabling internet access for a greater number of people.

Experts believe that e-commerce companies needed to rethink their relationship with logistics businesses and move away short-term thinking based on price to develop long-term partnerships. If e-commerce companies are trying to manage an overall end-to-end customer experience, they need to engage with the logistics providers more directly in the planning and process development.

While logistics businesses are optimistic about the future, they face a potentially significant challenge from a reinvigorated postal service.

IT and Communications Minister Ravi Shankar Prasad is due to meet the heads of Amazon India and Flipkart in the next few days to discuss how India Post, with its extensive rural network, can meet the needs of e-commerce players.

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