Study of Supply chain of e-commerce industry

(Amazon, Flipkart, Myntra)

Project Report

Master of Business Administration (Agribusiness)

November, 2019
College of Agribusiness Management
G. B. Pant University of Agriculture and Technology, Pantnagar

1. INTRODUCTION

Innovations in technology have motivated business organisations to use it for their day
to day operations. Technology has eased the business process. Today it plays an im-
portant role in improving business by helping them shift from traditional ways of op-
erations to new efficient ways of working. Use of ICT in business reduces manpower,
paperwork, as well as a time constraint. Organisations today have started working via
websites and they are selling or buying via the internet. This type of business transac-
tion is called E-Commerce. The emergence of E-commerce technologies has created
innumerable opportunities for businesses to develop and streamline their supply chains.

E-commerce has accelerated the supply chain process in consider-

ation to the customers’ expectations as well as increasing volumes. Attributes like cus-
tomer satisfaction and internet inventory management are unique. They demand effec-
tive logistic development in the supply chain process. Within the B2C model, e-com-
merce business SCM system eliminates distributors and manufacturers from the pic-
ture.

E-Commerce is generally defined as the buying and selling of goods or services over
the Internet; it is a commercial transaction conducted electronically on the Internet. E-
commerce has given space and benefit to the firms to establish their market presence
and augment the current market position by providing an inexpensive and well-organ-
ised distribution for their products or services. This kind of a model is advantageous
both for the firms as well as the consumers, where firms save costs on building brick-
mortar stores, hiring staff and other administrative costs, the consumers on the other
hand take the benefit of shopping from home and choosing from a wide variety of
products without going to the market or hunting innumerable stores for that one prod-
uct.

Competitions in the 21st century will be across supply chains, not individual compa-
nies. A supply chain is a network of facilities and distribution options for the entire
network of companies to work together to design, produce, deliver, and service prod-
ucts-commerce are a term for business which is done with the help of a website. It is
an advanced technology which is beneficial for customer and businesses as well. For
an e-commerce business, major requirements are websites and effective Supply Chain
Management (SCM). SCM focuses on the procurement of raw, manufacturing of the
product, distribution of the product in spite of location issues, till product reaches to
the consumer.

2. Supply chain and E-Commerce

Since E-Commerce is buying and selling of goods over the Internet, hence besides
payment between the two parties, it is movement of goods that also needs to happen in
a correct and timely fashion, hence the need of supply chain. For businesses to boom
in time of E-Commerce, supply chain becomes the most critical aspect which needs to
be quick, un-interrupted and secure. The competition is fierce as there are not one or
two but hundreds of E-Commerce firms fighting for market share, each identifying and
developing unique selling and delivery strategies.
Consumers today want quick results, if they can order and have a good delivered at
their doorstep today, they would not want to wait for 2 days to have it delivered; they
would go with the firm that offers quick and hassle-free delivery.

3. The 2 way supply chain

E-Commerce works on a 2 way supply chain business from warehouse to consumer

and consumer and back. Yes, E-Commerce firm offers the flexibility and scope to the
consumers to return a product in case it’s faulty or not of their choice. This in-turn lead
the companies to also plan and support a reverse supply chain of getting it back from
the consumer to their warehouse.

4. Sector Overview

Traditionally, the Indian logistics industry has been highly fragmented and unorgan-
ised with some estimates putting the share of the organised players at approximately
10% of the total market share. With the consumer base of the sector encompassing a
wide range of industries, including retail, automobile, telecom, pharmaceuticals and
heavy industries, the logistics industry has been increasingly attracting investments in
the last decade.

Logistics spend in India is 13%-14% of the GDP with two third done through road,
which suffers from poor road infrastructure and last mile connectivity. Various policy
initiatives like building road infrastructure, dedicated rail freight lines, GST rollout
impacting warehousing, e-way bill, passing of drone regulations, etc. are likely to im-
prove the logistics network in the medium to long term. In the interim, companies like
Elasticrun, Locus, Loginext are looking to apply technology to solve the demand
supply requirements by using AI, analytics, internet of Things (IoT), etc. to fill the gap
that exists in logistics infrastructure. At the same time, players like Rivigo and Black-
buck are revolutionising the segment by using technology to organise the fragmented
industry by connecting consumers with truck operators.

Start-ups in this segment are developing solutions aimed at improving all facets of the
segment including productivity, transparency, end-to-end visibility, warehouse and
yard management, fleet management, fuel cost management, customer relations and
accessibility, real-time tracking and accountability.

There are four categories under Logistics Technology servicing various categories:
(a) Full stack and hub services – Blackbuck, Blowhorn
(b) Servicing SME companies – Porter and Trukky
(c) Servicing e-commerce companies – Delhivery, Shadowfox
(d) Home and corporate relocation services
While majority of the start-ups in this space are aggregators of third-party truckers that
provide full stack solutions to customers, a few of them like Rivigo owns a portion of
their fleet.

5. E-commerce Retail Logistics

Products bought online undergo a range of processes before they finally reach custom-
ers. Starting with first mile logistics, which involves pick-up of goods from the sellers
and transporting it to the e-retailers’ fulfilment centre or directly to the mother ware-
house, depending on the type of fulfilment model i.e., inventory-led or marketplace.

In the inventory-led model, products are sent to the fulfilment centre without packag-
ing/labelling whereas in the marketplace model, products are completely packed and
sent to warehouse for storage. First mile logistics is followed by fulfilment, which in-
volves picking and packaging of products once an order is placed on the website. After
fulfilment, products are sent for processing/ sorting based on the delivery location at
the processing centre of 3PLs and connected further in the supply chain through line
haul depending upon the final delivery location. Line haul involves connecting the
main supply centre with the main demand centre,via surface or air. Surface or airline
haul is dependent on transit time and cost matrix. Airline haul is 3-4X costlier than the
surface line haul, however, has lower transit time. Recently 3PLs have started surface
express movements for dedicated movement between two points, with a shorter transit
time than the normal surface line haul movement. This is followed by last mile delivery
which involves dispatch and shipping of products from the mother hubs to the delivery
hubs, from where they are shipped out to the customers. This leg is dependent on the
manpower and infrastructure in terms of number of delivery hubs, delivery vans and
bikes.
6. Supply Chain Management

A. Flipkart
Going by the current market trends – eCommerce as an industry has witnessed an un-
usual rise in business in the past some time. With PayTM joining Flipkart and Snapdeal
in the eight-member unicorn club, eCommerce industry has clearly stolen the lime-
light!
And according to a recent report submitted by Bank of America Merrill Lynch in 2015
– the eCommerce market in India is expected to be worth $220 Bn by 2025 as well.
But since, the logistics market remains to be one of the most unorganized markets in
India, speedy delivery still remains to be an unsolved pain-point and to worsen that,
there isn’t any big player that can provide pan-India access at economical cost too.
Keeping that aspect in mind – going ahead, logistics would certainly be the factor to
potentially define a company’s success. In fact, according to a report submitted by
Market Researcher Novonous; India’s logistics industry which stands at $300 Bn bil-
lion is estimated to grow at a CAGR of 12.17% by 2020.
And one of the top contenders that holds the highest chance to rule the market remains
– eKart!

Who is eKart?
To keep it short and simple – Owned and operated by Flipkart; eKart is their preferred
logistics partner that helps them with almost all their deliveries to all major locations
across India.
It had begun in 2010 as Flipkart Logistics and then was later changed to an independent
entity in attempts to capture a larger market share. Most of their deliveries are taken
care by eKart itself, and the delivered items can be tracked by visiting the official web-
site of Flipkart, where you need to enter the eKart Tracking ID and eMail Address, in
the eKart tracking box.
Just like every other logistics company, their primary revenue model is delivery
charges, apart from which, data monetisation is another way they make decent money
as well.
You can reach them on either Flipkart’s support team or on 1800 208 9898, +91-80-
67982222, or support@ekartlogistics.com.
B. Amazon