Delivery roadblocks: E-commerce players grapple with increased demand and more

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Published: March 30, 2020 1:01:40 AM

Retail experts estimate that the current situation might wipe off 10% of e-commerce companies’ annual GMV in the country.

Although the government has exempted delivery of essential products through e-commerce, delivery operations were briefly disrupted on the first day of the lockdown.

India’s e-commerce marketplaces started recording a surge in orders much before the lockdown was announced. According to a report by RedSeer, the gross merchandise value (GMV) for groceries across e-commerce platforms went up by 110-115% in February 2020, while the beauty and personal care segment saw a surge of 120-130% driven by the demand for sanitisers and hygiene products. BigBasket, for instance, saw its traffic and revenue double, while its average value went up by 15-20% in early March; meanwhile Milkbasket saw a surge of 50-60% in orders during this time.

However, rising demand, limited supply and the complete lockdown implementation by the government for 21 days starting March 25 has hit these companies. Flipkart had to suspend its operations for a day, only to resume later, while Amazon has been prioritising deliveries of essential products.

A spokesperson from Amazon says the company is “closely monitoring the developments of Covid-19 and its impact on our customers, selling partners and employees”, and making changes to its logistics, transportation, supply chain, purchasing and seller processes. This includes stocking and delivering priority items like household staples, health and hygiene products, sanitisers, baby formula and medical supplies.

Operating in a lockdown

Although the government has exempted delivery of essential products through e-commerce, delivery operations were briefly disrupted on the first day of the lockdown. “The key challenge is on the field; our delivery partners are being stopped by the police, and some of them have even got beaten up,” said a BigBasket spokesperson.

Supr Daily’s founder and CEO, Puneet Kumar, says it has been “incredibly difficult” for his staff to reach the warehouse and delivery locations due to restrictions on movement within cities. “We are now operating at less than 10% capacity, due to which we unfortunately had to delist most grocery products from our app.”

Albinder Dhindsa, CEO and co-founder, Grofers, informs that these operational and regulatory hiccups have led to a backlog of four lakh orders. Milkbasket, meanwhile, suffered losses as housing societies denied entry to its delivery executives. “On Monday (March 23), we had to dump 15,000 litres of milk and over 10,000 kg of fruits and vegetables,” says Anant Goel, CEO and co-founder Milkbasket.

Authorities have also asked several e-commerce as well as retail players to shut down their distribution centres as a large number of people are involved in operating and risk spreading the virus. This has impacted the supply of products and their operations. Several offline players such as Tata Croma have suspended their online operations as they had to shut down their distribution centres.

The road ahead

Business for these players in the next quarter depends on the cooperation extended by the authorities, experts say. Anurag Mathur, head – retail, and partner, PwC India, says that while larger marketplaces might be able to get clearances from authorities and continue their services, the operations of smaller platforms could suffer during the lockdown.

Retail experts estimate that the current situation might wipe off 10% of e-commerce companies’ annual GMV in the country. But if the companies and the government reach an agreement, and the interstate movement of goods is not hampered, e-commerce could regain momentum, says Ankur Bisen, senior vice president (retail), Technopak Advisors.

The present crisis may also see hyper-local deliveries make a comeback. E-grocery players like Grofers had stopped hyper-local delivery (delivering from neighbourhood shops) due to the high costs; but that could well emerge as a solution for these players in these difficult times, experts say.

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