Conventional courier companies need to find ways to create a more compelling offering in order to stay ahead of the game in the e-commerce segment, says Neeraj Bansal, CEO of DHL SmarTrucking, a full truck load solution for inter-city transportation in India in an interaction with Moneycontrol. According to Bansal, in India, the e-commerce sector has witnessed a steep increase in the past decade and consequently, e-commerce logistics has become a prime market. Edited transcript:
Q) Why are conventional courier companies getting into the business of e-commerce logistics in India?
E-commerce logistics is a burgeoning market in India. A CII-KPMG report released earlier this year has valued the Indian e-commerce retail logistics market at $1.35 billion, expected to grow 36 percent in the next five years. This is a big pie.
To cater to this growth, conventional courier companies need to find ways to create a more compelling offering and stay ahead of the game. To ensure this is done, there are some challenges that are unique to, or more common in, the e-commerce space that need to be well-thought-out. One is the technical aspect that would meet customers’ expectations of knowing where their shipment is at all times and having the option to choose their preferred delivery time.
The second challenge arises because consumers today want to receive their purchases more quickly from their e-commerce sellers, who often compete on the basis of delivery times. There are e-commerce companies that promote same-day delivery capability as a value proposition that distinguishes them from their competitors, and therefore fast, reliable and on-time delivery is a critical ask from their logistics partners.
Returns processing is another key issue in e-commerce. Since the transactions are B2C rather than B2B, collecting returns from individual origins and aggregating them for back-haul becomes quite challenging for e-commerce logistics providers.
Global logistics companies such as DHL already possess the capabilities to solve all the above issues. Given the scope and scale of the e-commerce market, entering it then becomes a fairly easy business decision for traditional courier companies.
Q) How lucrative is this segment for a company such as DHL?
The trucking industry in India is around 85 percent unorganized at present. DHL SmarTrucking brings efficiency and organization to the Indian logistics sector, with a fully-owned fleet that ensures 95 percent reliability, a unique driver relay model which reduces transit time by up to 50 percent (compared to traditional trucking), and technology integration to provide real-time tracking for 24x7 visibility and transparency.
Q) How many clients of DHL SmarTrucking are e-commerce or internet enabled companies? Do you see this number growing? What is the target?
We work with a number of leading e-commerce players, but we cannot share specific details, due to our confidentiality agreements.
Discussions are ongoing with other potential clients and we expect several more companies to come on board this year. With our DHL SmarTrucking solutions for dry logistics and DHL SmarTrucking Coldchain solutions for temperature-control logistics, we cater to all sectors and industries across the e-commerce domain, including pharmaceutical, packaged foods and quick-service restaurants, dairy and confectionery, fashion retail, online grocery and automotive.
Q) What amount of your overall business is expected to be coming from the e-commerce segment?
In line with our company policy, we are unable to share specific numbers.
Q) How will DHL SmarTrucking compete with the existing players in the market?
The Indian logistics industry is fragmented with many small local players as well but there has been no single player in the market with a strong global presence. As part of the leading global logistics provider, Deutsche Post DHL Group, DHL SmarTrucking offers the fastest transit times and highest reliability with ease of use, end-to-end consignment visibility, temperature-controlled capabilities and real-time tracking that beats industry standards.