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Unlock 1.0: Demand shoots up; but last-mile challenges delay e-commerce deliveries

What used to be delivered in one day could be taking as much as five days now given the issues related to COVID-19.

June 25, 2020 / 07:05 PM IST

E-commerce volumes have almost reached pre-COVID levels but last-mile fulfilment of deliveries continues to be a challenge, say industry executives. Issues around shifting containment zones, certain warehouses not being fully functional and delivery executives facing problems while making final drops are among many of the challenges that are holding up e-commerce deliveries.

“There have been delays for sure; demand has shot up but supplies continue to remain a problem,” said Pranshu Kacholia, vice president, business, at Clickpost. “We are facing issues around reduced functional efficiency of last-mile agents.”

Efficiency is reduced by changing rules at different gated societies which increases delivery times. Further, with so much caution which needs to be practised at the ground level, delivery executives could be operating at 70-80 percent efficiency, as per estimates from industry insiders.

Things have improved from the days of the lockdown, though. According to Kapil Makhija, chief executive officer of Unicommerce, if only 50-60 percent of the orders could be fulfilled during the first weeks of the opening up, that number has gone up to almost 90 percent in June.

“In some cases, we are seeing that delivery times have gone up,” said Makhija. Unicommerce is an e-commerce-focussed supply chain software platform, which helps brands sell and deliver products through online channels.

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Makhija pointed out that order volumes are almost at 90 percent of pre-COVID days with kids’ products at 100 percent, electronic items up 150 percent and fashion at almost 70 percent volumes.

Another logistics software solution used popularly by e-commerce companies, Shiprocket, also finds on-ground logistics a challenge. Saahil Goel, Chief Executive Officer, Shiprocket, said the shortage of manpower and a sudden jump in demand for products online are the reasons behind the delay in fulfilling deliveries.

“If intra-city movement time for some cases was a single day, that has jumped to five days,” said Goel. “For intercity goods, movement time has gone up by at least 50 percent.”

Logistics is designed around a hub-and-spoke model which is the point of challenge for undertaking deliveries during a crisis period like COVID-19. Industry insiders pointed out that the source of the product might be close to the delivery point, but as per the system the product goes to a warehouse first. From there it is dispatched to the customer’s location. In many cases, this extra leg is causing problems. Hyperlocal deliveries can be a solution in those cases, but such strategies are still being designed by brands.

“In most cases, warehouses are located in a cluster; if that area gets a COVID-19 case and there is a lockdown there locally, the entire warehouse and ancillary facilities stop functioning,” said a top executive of a logistics startup. While such issues were more profound in May and the first weeks of June, these issues are getting streamlined slowly.

One major challenge pertains to processing returns. Sources pointed out that many companies have increased the returns window and this has caused a pile-up of orders for returns from as far as March.

“While the agent might pick up the product, at the warehouse it needs to be sanitised, that takes up time and is creating bottlenecks,” said the logistics executive quoted above.

This reverse processing is also in some cases causing delays in processing deliveries.
Pratik Bhakta
first published: Jun 25, 2020 07:05 pm

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