Flipkart has launched a new “Express Program” for speeding up deliveries as it faces growing competition from Amazon, which is rapidly closing in on Flipkart's lead in India's e-commerce sector.
The program started as a small test trial, but has been expanded to more than 3,000 merchants on Flipkart’s marketplace, and helped cut shipping times by one day, according to Anil Goteti, the company’s head of marketplace.
The program speeds up the delivery process by preparing new orders for shipment within two hours. Flipkart did extensive training with its marketplace sellers, helping them pick the items most suitable for the program, and demonstrating what needs to be done to pack the items and mark them ready for shipment. Once an item is marked for shipment, it goes directly to a sorting hub, skipping over the first-mile warehouses that are usually the first stop on the delivery journey. Flipkart implemented the new program through both its own Ekart logistics arm and third-party logistics providers.
Flipkart is trying to improve delivery times to counter Amazon’s growing success in India. Amazon’s mobile app engagement in India grew 46% YoY in Q1 2017, and it accounted for 30.3% of mobile commerce there in March, nearly matching Flipkart’s 30.7%, according to research firm 7Park Data. This is a very positive sign for Amazon, as the majority of India’s population uses mobile devices as their primary form of internet access. Amazon also offers its free, two-hour Prime delivery in India, though Prime has yet to see broad adoption in the country. If Flipkart can build a reputation for speedy delivery among Indian consumers, it could limit Amazon’s ability to attract new customers in India with Prime delivery.
The parcel delivery industry — a segment of the shipping sector that deals with the transportation of packages to consumers — is booming thanks to e-commerce growth, and players outside the industry want a piece of the pie.
BI Intelligence, Business Insider's premium research service, has compiled a detailed report on the future of shipping that looks at efforts by Amazon, Alibaba, and Walmart to handle more of their own shipping and concludes that big retailers are well positioned to disrupt the parcel industry.
Here are some of the key points from the report:
- Transportation and logistics could be the next billion dollar opportunity for e-commerce companies. The global shipping market, including ocean, air, and truck freight, is a $2.1 trillion market, according to World Bank, Boeing, and Golden Valley Co.
- There is much at stake for legacy shipping companies, which have seen a boom in parcel delivery as e-commerce spending has risen. Twenty different partners currently share the duties of shipping Amazon's 600 million packages a year, with FedEx, USPS, and UPS moving the most.
- Amazon, Alibaba, and Walmart have so far focused on building out their last-mile delivery and logistics services but are increasingly going after the middle- and first-mile of the shipping chain.
- Amazon has already made major moves across each stage of the shipping journey. It launched same-day delivery service, which it handles through its own fleet of carriers, cutting out any third-party shippers. The company also recently began establishing shipping routes between China and North America.
- Walmart's interest in expanding its transportation and logistics operations is almost purely related to cost-savings. It's begun leasing shipping containers to transport manufactured goods from China and is making greater use of lockers and in-store pickup options to cut down on delivery costs.
- Alibaba has begun leasing containers on ships, similar to Amazon's Dragon Boat initiative. This means that Alibaba Logistics can now facilitate first-mile shipping for third-party merchants on its marketplace.
In full, the report:
- Sizes the market for the shipping industry.
- Explains how the industry operates in broad terms.
- Suggests why major e-commerce retailers should disrupt the space.
- Outlines the shipping initiatives of Amazon, Walmart, and Alibaba.
- Concludes how these moves might impact traditional carriers.
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