Little costly but prompt delivery, promises Flipkart

Even as the largest retailer of the world, Amazon, made news recently with its intention to  use unmanned drones for quick delivery of goods, Indian e-commerce companies are also turning aggressive on reaching out to the customer fast.

Flipkart on Tuesday launched a next-day delivery service. The service will begin with Delhi, Noida, Mumbai, Chennai, Bangalore, Pune and Hyderabad. "We are launching this service with a wide selection of products. It might not be available in a few cases like imported items,” said Ravi Vora, senior vice-president (marketing), Flipkart.com.

The service will be available at an extra cost of Rs 90 for every item ordered, over and above the normal product and delivery cost. Launching the service meant that the company had to streamline its supply chain, resulting in higher costs.

"We are expecting that around five-15 per cent of our active customers will avail of this feature, on the revenue side we expect a larger contribution,” said Vora.

Experts argued the financial implication of the new service would depend on how many customers opted for it. If a substantial number of customers don't use this feature, the cost might go up further, said an industry source.

Also, the marketplace model has its own sets of challenges. With sellers, buyers and the hosting website company located in different cities, the next day delivery can be a challenge. While the service has been started with select sellers, the base will be expanded in some time.

Earlier in the year, Myntra, another e-commerce company, had rolled out a pilot project in select cities for same day delivery. Mukesh Bansal, chief executive of Myntra, said two-four hours delivery is possible in most big cities and one day deliveries are a realistic option in e-commerce.

"The crucial part in quick delivery is on the inventory and technology side. It requires skilled warehouse management, efficient back-end processes and high technology,” said Bansal of Myntra.

With the increasing competition in e-commerce space, delivery has become an essential factor after price. The trick would be the efficient service. The concept of charging customer some extra money with quicker delivery has worked internationally, we would have to wait and watch how Indian customer responds to it, said Gaurav Gupta, senior director, Deloitte India.

NEXT-DAY DELIVERY

Flipkart's next-day delivery service to begin in Delhi, Noida, Mumbai, Chennai, Bangalore, Pune and Hyderabad Customers to be charged Rs 90 more for each item Company to incur higher costs to streamline its supply chain