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Sumedh Gupte, a resident of Pune, bought a Micromax smartphone from Flipkart much before the online portal's Big Billion Day sale started. Gupte ordered the phone on October 2, which was to be delivered on October 9. "After much follow-up I received the product on October 13. Every time I called them or to track my shipment, I was told it was at the Bangalore hub and would reach Pune in a day's time," recounts Gupte.
Gaurav Deoras, a resident of Mumbai, booked an Asus Zenfone 4 from Flipkart during the Big Billion Day sale. He is still awaiting delivery. "I got a good discount on the product but am yet to get it. I have already made the payment. I had booked two phones; one I received in two-three days. The delivery boy said before the sale day they were delivering 20-30 products a day, but they were now delivering 60-70," said Deoras.
A customer whose product was delivered by GoJavas tweeted that the company was an 'epic fail'. When the online team contacted the individual, he said the product reached before time; it was meant to be a surprise birthday gift.
The online sale bonanza that started with Flipkart's Big Billion Day, followed by other players like Snapdeal and Amazon, showed that while e-commerce is here to stay and the Indian consumer is ready to transact online, there are inefficiencies on the supply side.
With Group M's Grand Diwali Mela, supported by search giant Google and Amazon, going on and with demand again set to rise due to Diwali festivities, the supply chain services providers are gearing up for a better show. The Grand Diwali Mela began on October 3 and will go on till this Friday.
While the Mela has not made noise similar to Flipkart and Snapdeal, according to a Google India spokesperson, two million visitors had visited the portal and about 150,000 samples had been sold since the sale started. "About 45 per cent of the traffic comprised products for women and 70 per cent of the samples were from Tier II and III cities," said the spokesperson. All the logistics are handled by Amazon, which partners with other third-party players.
"I think as a supply-side player, we need to beef up further to manage demand. We need to invest more aggressively in creating capacity, since even our highest projections fail during times of high demand. With the Google Online Shopping sale and Diwali, we are continuing to prepare ourselves to match the demand," said Sahil Barua, CEO and co-founder Delhivery.
Delhivery, which works with the top five e-commerce players in Delhi area, manages shipments of 120,000-150,000 on a daily basis. "I agree we all (in the system) need to do a far better job at managing demand, as consumer demand is fast outstripping the supply chain capabilities of e-tailers, as well as supply chain partners like us. Google's sale and the Diwali festivities will create another peak in volume," said Barua.
Delhivery is beefing its capacity to be able to address such huge demand. From 175 cities, the company is expanding to 260 by the end of 2014-15. It is also increasing the number of distribution stations from 225 at present to 650 by the end of March next year and 1,000 by June 2015.
"I think, going ahead, the forecasting facility will increase. A lot of people have not focused on this feature. With this, the supply chain will improve in terms of demand planning," said Vijay Ghadge, chief operating officer, GoJavas. He accepts that the biggest casualty of these online sales has been customer services. "It's not that we were not ready for the peak but the peak has been bigger than expected. We had planned for 65,000- 70,000 kind of shipments, but it went as high as 98,000. For every company on the supply side, the extent of damage was different," said Ghadge.
He is confident that for Diwali they will get back and be able to meet the deadline for delivery. "We were a 1,800 team a few months back; in 45-60 days, this has gone up to 3,500. By the end of next month, we will have 4,000 employees," said Ghadge. He believes that though services faltered during the sale, it will be a good learning experience for the sector which is still in its infancy.
"Over the next 18-24 months, this kind of stuff will happen on a daily basis. The peak we saw during the festive occasion last year now happens on a daily basis and we will have to continuously beef our systems," said Ghadge. For last year's Diwali, GoJavas had a peak shipment of 50,000-60,000 a day. At present, the number is 100,000 a day.
Meanwhile, GoJavas is expanding to 200-250 cities in the next six to eight months and expects to touch revenue of about Rs 150 crore by the end of this financial year.
Sanjiv Kathuria, founder and CEO of DotZot, feels better planning would have helped the delivery experience. "It's not just about the players; you also need to look at the infrastructure. Go to any airport, you will see a mountain of shipment. Ideally, we should have made use of train services, too. I think we need to cultivate partnerships with other players so that shipments need not be stalled," he said.
The other aspect of the supply chain is reverse logistics. Products rejected by customers due to some defect or for repair need to be taken back and delivered to the customer. "We did a survey for the Indian market and the study said 80 per cent of customers who have had a bad return experience will not buy from the same retailer. The e-commerce return rate in India is 10-12 per cent (excluding CoD)," said Hitendra Chaturvedi, founder and CEO of GreenDust.
Chaturvedi said the returns for products sold during sales would take a cycle of 30 days and, hence, he has not seen any big volumes. "The e-commerce players in India have both a market place model and an inventory-based one, and in each the returns policy is different. E-commerce players are yet to realise their returns strategy," he said.
