The growing number of value-savvy online shoppers from India’s smaller cities and towns, aka Bharat is reshaping India’s e-commerce landscape. The distinctive needs of these consumers have led to the rapid growth of value e-commerce with differentiated business models optimized to serve the needs of value-conscious online customers.
A report released by global consulting firm Kearney in August 2021 has highlighted how Bharat, comprising aspiring & mass households in tier 2-4 cities and rural areas, is driving the growth of value e-commerce in India.
While today this segment accounts for only 16 percent of value e-commerce demand, Kearney estimates that this group of consumers will account for 38 percent of value e-commerce demand by 2026 and nearly 50 percent of value e-commerce demand by 2030. The rise of value-conscious shoppers from Bharat is expected to be one of the key drivers of value e-commerce growth in India.
Delivering efficiently and economically across the span and depth of Bharat requires thoughtful and innovative e-commerce logistics solutions.
Snapdeal, India’s leading value e-commerce platform, draws more than 80% of its users from outside the metro cities and over 70% of its orders come from towns with less than 1 Million population. Snapdeal has leveraged technology and a collaborative business model to develop a logistics platform that is well-suited to serve the needs of Bharat in a cost-effective manner and with high service levels.
Where is my order?
The choice for all e-commerce companies so far has been between a captive or a third-party logistics (3PL) network. Depending on their needs, e-commerce companies have chosen to build their own networks or opted to work with specialized e-commerce logistics providers who serve many small and large e-commerce businesses. Many large e-commerce platforms have experimented with hybrid versions using a combination of both owned and 3PLs.
While a captive network offers a high degree of control, it is an expensive and time-consuming arrangement with high overheads.
On the other hand, 3PL arrangements provide the benefits of lower operating costs and the flexibility to expand coverage as business needs. To meet the growing customer demands, many businesses have turned to 3PLs to outsource their shipping and fulfillment operations.
However, working with 3PLs also comes with its own set of challenges. The stand-alone operations of 3PLs mean that the e-commerce platforms have limited control and visibility of the logistics operations.
It is fairly common for buyers to want to know the whereabouts and status of their orders. However, limited visibility into in-transit orders, which is common when working with 3PLs, results in an inability to adequately respond to their questions and solve their problems, resulting in deterioration of customer experience.
Then there are times when orders take longer, not because of distance, but because some logistics providers may face operational challenges or cost optimization issues in dealing with the shipments. As a result, customers end up waiting a long time for their orders to arrive.
Collaborating with Bharat to serve Bharat
The sheer physical span of Bharat and relatively less concentration of buyers spread over a larger area means that solutions for urban settings do not serve Bharat well.
Snapdeal believes that the best way to serve Bharat is by leveraging its strength. It is today delivering to Bharat by engaging with local and regional logistics players who are intimately familiar with the intricacies and nuances of the areas they serve.
But unlike a traditional 3PL arrangement, where the e-commerce platform takes a back seat, Snapdeal continues to remain fully aware during the fulfillment process even as the actual ground operations are handled by the 3PLs.
How does Snapdeal do this? Quite simply by combining the local expertise of its logistics partners with the control and efficiency of its logistics technology platform, UniMove.
UniMove: a win-win partnership
Under the traditional supply chain, a single 3PL manages the entire journey of a packet as it travels from the seller to the origin city hub (the first mile), from the origin city hub to the destination city hub (the mid-mile), and finally to the buyer’s home (the last mile).
In comparison, UniMove – Snapdeal’s logistics technology platform, allows it to dis-aggregate this entire journey and select the most suited logistics partner for each leg of the order’s transportation journey.
Snapdeal has a lot of data on the past and current performance of various courier partners at a pin code level. An ongoing, granular analysis of this data allows Snapdeal to choose partners for each leg based on their past performance, available capacity, cost, and speed of delivery.
This allows shipment volumes to be consolidated as per the strength of each partner – benefiting the logistics partner, the buyer and the platform with an optimal combination of cost and performance, leading to better user experience and efficiency
At the heart of this intelligence is an integration of the 3PL’s IT networks with Snapdeal’s technology backbone, hosted on Snapdeal’s private cloud, Cirrus. Since all the 3PLs are integrated on Snadpeal’s tech backbone, Snapdeal retains full visibility on a packet even as it changes hands across multiple partners. It allows Snapdeal, the sellers, the buyers, and the courier partners to track the status of an order in real-time.
Captive-like and asset-light
From an operational perspective, Snapdeal’s UniMove offers control & service quality similar to that of a captive logistics model, but without the capex and high overheads associated with the same.
UniMove gives Snapdeal clear visibility and insights on the fulfillment process. This leads to more control on the overall journey, which results in a better user experience with faster and more reliable deliveries.
The asset-light approach to a captive-like logistics network has allowed Snapdeal to continue its sharp focus on capital efficiency and unit economics while growing in scale.
On the Move, with UniMove
UniMove is one of the Bharat-facing capabilities that Snapdeal has built during the pandemic period. And its adoption is growing fast. More than 75% of Snapdeal’s first mile and more than 23% of its last mile journeys are already on UniMove and this continues to grow.
A decentralized, collaborative and tech-enabled approach to logistics enables Snapdeal to serve more than 96% of Bharat, including buyers in the Tier 2+ cities and towns in India, where the majority of value-seeking buyers are located.
As more and more customers join the e-commerce bandwagon and orders flow across Bharat, efficient, cost-conscious pan-India logistics networks will be key to business growth and user satisfaction.
In bringing together an ecosystem of tested partners who work as an integrated team, Snapdeal is combining the experience of its local partners with the cohesion of centralised operations and technology. In the process, it has built a quintessential Indian solution – where the whole is more than the sum of its parts.
