BAKING THE E-RETAIL PIE
In my last blog, I outlined the larger picture of logistics and warehousing in India. I spoke about the projections for future and discussed in detail about the situation of our industry at present. While discussing the projections, I had focused more on internal factors like growing GDP, maturing industry segments, growth in exports and rise of organized retail and the imminent GST implementation. All factors related to and linked with the way today’s business functions. In this blog, I am taking a step back to look at it from a little distance.
The factor that I am going to discuss here is a huge one and is set to be a game changer for warehousing logistics business in the coming times. This huge differential is FDI and E-Retail. Still perceived to be in its infancy in India, E-Retail has already taken the market space by storm. Buoyed by the encouraging scenarios, many giants have decided to back this nascent business with big bucks.
The News Proves
This is not fanciful stargazing. Just a little look at the everyday news offers proof that this new trend is here to stay and grow. I share some snippets with you here:
- Shopclues plans to raise Rs.600cr (TOI, Sept 2014)
- Inspired by Alibaba and its Indian clones, Tatas to get into E-Comm (TOI, Sept 2014)
- Mobile retailers plan on E-tail recharge to tap online rush (TOI, Sept 2014)
- Arvind’s E-tail arm plans new portal, eyes acquisitions (TOI, Sept 2014)
It does not take much to safely assume that it is good news for our industry. Warehousing and Logistics are the back bone of E-Retail business. Presence in critical distribution centers and ability to deliver goods in a satisfactorily and timely manner defines consumer satisfaction and loyalty for the E-Commerce players as the point of delivery is the only physical and tangible interaction of the e-tailer and the consumer. This means that the importance of Warehousing and Logistics is set to grow to huge proportions with the growth of this phenomenon. This is evident from the following news headlines:
- E Retailers hunt for space to push growth – begin a massive hunt for warehousing facilities (TOI, Aug 2014)
- We will spend over $100 m on supply chain this year (ET, Sept 2014)
- Logistics companies score high on E-Comm buzz (ET, Sept 2014)
A Piece Of The Pie
Amazon recently announced a sum of $2 Billion for India right after Flipkart raised $ 1 Billion in a fresh round of fundings. While India’s top online retailers hire venture capitalists to lead mergers and acquisitions, online retail giants like Amazon and Flipkart have launched a massive hunt for warehousing facilities around the country. According to an estimate, around 70% of the investment by these e-tailers goes into setting up back-end infrastructure that includes warehouses and logistics facilities. It is definitely good news for our industry. The booming e-retail with a fillip from FDI augurs well for our business. The pie is growing larger and so is our share of it.
Can We Have The Pie AND Eat It Too?
Alright! A feast is being served and we are at the table. But have we contributed something to the fare? It would be complacency to just sit and wait to be served. This is our opportunity to make our contribution to the rising phenomenon by upgrading our services, making them new-gen, offering seamless services and adding the quality factor to our offerings. As ‘The Retailer’ – the EY publication in consumer products and retail sector for April – June 2013 clearly stated, procurement and warehousing is different in case of online retail. Some of the factors that require attention are:
- Number of location of warehouses
- Inventory management
- Number of vendors by product category and location
This opportunity has brought our Industry to the threshold of the Big Leap and it is up to us to get ready for it.
Walk The Talk
This is my favorite part. Stepping back and looking at a phenomenon helps one gain perspective. But that is not where the quest ends. What does one do with it? Well, take action, obviously! And this is how I see my company make the most of the situation: I have always been passionate about quality. I want to make sure that it shines through our actions in all aspects of warehousing business. Be it the hardware – quality of construction – or the software- the men who manage them, my focus it to make sure that each aspect raises the industry benchmark. Also, my vision is to
- Increase our footprint by creating distribution centers at major intersection of national highways to cater to the growing need of strategic warehousing locations.
- Create value by ensuring quality and consistency of logistics offered by us.
Once I know that I have done my bit towards making the pie bigger, I can happily sit back and help myself to large slice!