Logistics to be game-changer for delivery businesses amid Covid if they make this cost-effective move

Published: May 26, 2020 1:19 PM

Logistics for MSMEs: The penetration of technology in logistics will only increase from here. Logistics software-as-a-Service (SaaS) will see a lot of reception as companies will want to pay-as-they-go.

In November 2018, the interest subsidy was increased to 5 per cent from 3 per cent with the aim to boost MSME sector exports.Logistics is no longer an activity that happens in the background, it is now the differentiator.
  • By Nishith Rastogi

Logistics for MSMEs: Logistics has suddenly been thrust to the centre of the Covid-19 pandemic across the globe. Things are no different in India. Logistics is no longer an activity that happens in the background, it is now the differentiator. The pandemic has brought both opportunities and challenges for startups. The strange thing is that both the challenge and the opportunity is logistics. For e-grocery, e-commerce, food delivery, and other on-demand service companies, this period might very well be the epochal moment when they can deeply integrate themselves into the daily lives of consumers. But for that to happen, logistics will have to play a critical role.

On the ground

Most people are familiar with the last-mile delivery, but logistics is a lot more than just that. Online players either tie-up with FMCG companies, farms, wholesalers, etc to source the required items and this means that logistics is involved in every step of the process — right from the farm to the warehouse, warehouse to area-specific hubs and finally from hub to customer. Delay at any step has ripple effects and leads to late delivery.

While unaccounted delays is an impediment, the other big cause for concern is the manpower. E-groceries and e-commerce players are running their operations with just around 60 per cent of their usual manpower. According to various news reports, the big guns are hiring thousands of on-ground staff to meet the surging demand and some are even willing to pay more compensation to these workers.

The mass hiring also means that the new staff needs to be trained not just in contactless order execution but also on the sanitization best practices, both for their own safety and the customer’s safety. All this has meant that customers have had to wait longer to get their orders.

Startups have obviously realized this and being the resourceful lot, they are now tying up with other companies who can offer complementary assets/skill sets. For example, Flipkart and Bigbasket have tied up with Uber to deliver essentials. A strategic partnership like this ensures that deliveries happen in a more predictable manner and also the driver workforce gets to earn too. 

These strategic partnerships haven’t just been on the delivery front, it is also happening on the supply side of the equation. Spencer’s Retail and Flipkart recently tied up to ensure hyperlocal delivery of essentials and groceries. According to reports, Spencer’s will become a seller on Flipkart and offer special packs of essentials. This again combines the last-mile delivery of Flipkart with the supply of Spencer’s Retail. 

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Another trend that is shaping up is the deepening alliance between FMCG companies, modern trade (MT) supermarkets, and e-commerce players. FMCG companies are integrating tightly with MT outlets and e-commerce companies to push their stocks because delivering to the traditional mom and pop stores has become tough.

Road ahead 

There is no doubt that logistics will be the game changer moving forward. And technology will play a key role in enabling better logistics. For example, app-enabled deliveries already have lower onboarding and training time of new staff. The staff can simply depend on the technology for planning and go about executing the tasks. Also, technology has now made contactless delivery so simple by adding an electronic proof of delivery, like a photo of the delivered order. Startups are upping their logistics game with these technology improvements.

The penetration of technology in logistics will only increase from here. Logistics Software-as-a-Service (SaaS) will see a lot of reception as companies will want to pay as they go instead of upfront fixed software charges. SaaS will make logistics software affordable. More importantly, technology will help companies manage their resources better and also give deep-dive analytics to enable better decision making. The old manual way of managing logistics will soon be discarded, as logistics operations will only become more complex. 

With Covid-19 shaking up the existing logistics structure, companies will want to have more captive control over their logistics operations. Some startups might even look at reimagining their existing supply chain to make it nimble and adaptive to change. For global companies and well-established startups, the new mantra will be ‘China plus one’. Companies will diversify their suppliers/vendors and add another country along with China to source their material from, so as to reduce the potential impact of any adversity. To put it simply, Covid-19 has ensured that logistics is now at the forefront of every business.

Nishith Rastogi is the CEO & Co-founder of Locus.sh. Views expressed are the author’s own.

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