Can Railway’s Logistics Support to eCommerce companies be a Game Changer?

Can Railway’s Logistics Support to eCommerce companies be a Game Changer?

In the recently announced Railway Budget, there were several technological and operational initiatives announced by the BJP Government. But one announcement among them was closely followed by major eCommerce companies in India; a decision which can have far reaching impact on the overall $2.3 billion India eCommerce industry:

Railway minister Sadananda Gowda had announced that “Railways would extend logistic support to various ecommerce companies by providing designated pick-up centres at identified stations.”

Although no further clarification was mentioned regarding these ‘pick-up centres’; two facts which everyone in the logistics industry is aware of: Railways cargo is almost 50% cheaper than air-cargo & 90% of the existing online orders are currently being shipped via air-cargo!

The biggest challenge which eCommerce companies are facing right now is the last mile delivery of goods ordered online. To overcome this difficulty, Flipkart had to start their own logistics company in 2012, which is supporting them immensely. But other small scale eCommerce companies which are not supported by million dollar funding are depending on other third-party logistics services to fulfill the orders; which is both expensive and unreliable.

If Railways start an exclusive service only for eCommerce companies, with pick up centres spread across the country, it can be a major game changer, which can not only reduce the prices of shipping but also become a reliable and trust-worthy service.

Indian eCommerce companies have wholeheartedly welcomed this decision, as one of their biggest concerns regarding safe and cheap delivery of online orders can now be come tackled with the help of Indian Railways.

Railway minister Sadananda Gowda had announced that “Railways would extend logistic support to various ecommerce companies by providing designated pick-up centres at identified stations.”

Although no further clarification was mentioned regarding these ‘pick-up centres’; two facts which everyone in the logistics industry is aware of: Railways cargo is almost 50% cheaper than air-cargo & 90% of the existing online orders are currently being shipped via air-cargo!

The biggest challenge which eCommerce companies are facing right now is the last mile delivery of goods ordered online. To overcome this difficulty, Flipkart had to start their own logistics company in 2012, which is supporting them immensely. But other small scale eCommerce companies which are not supported by million dollar funding are depending on other third-party logistics services to fulfill the orders; which is both expensive and unreliable.

If Railways start an exclusive service only for eCommerce companies, with pick up centres spread across the country, it can be a major game changer, which can not only reduce the prices of shipping but also become a reliable and trust-worthy service.

Indian eCommerce companies have wholeheartedly welcomed this decision, as one of their biggest concerns regarding safe and cheap delivery of online orders can now be come tackled with the help of Indian Railways.

Some reactions:

Rohit Bansal, founder of Snapdeal.com said,

“The initiative is certainly a positive move forward for the ecommerce industry.

The extension of this mode of transport to the ecommerce industry will further ascertain timely and faster delivery of orders to consumers.”

amazon-india

Team Amazon India said,

“This is a strong recognition of the importance of the eCommerce industry’s ability to provide value to consumers in India.”

..

praveen-sinha-jabongPraveen Sinha, cofounder of Jabong said,

“We can set up a collections and returns centre at stations. We can consolidate orders and book as cargo on trains which could then be picked up directly.”

Even traditional logistics companies are upbeat about this decision, as it will help them save costs.

Sanjiv Kathuria_webSanjiv Kathuria, Chief Executive of logistics company DTDC’s ecommerce arm DotZot said,

“It will also help us offer a separate product offering to our clients, giving them an option of a cost-effective alternative of using the railways for transporting shipments between cities, though the delivery might be delayed by a day or two..”

Some experts from logistics industry are also cautioning us, saying that Indian Railways service is quite lethargic, and there is no accountability of goods undertaken. Often delicate items which need care while shipping are damaged using Rail cargo, and there can be unexplained, pro-longed delay in shipping as well.

It would be quite interesting to see how eCommerce companies leverage this wonderful opportunity to use the huge network of Indian Railways in optimizing their shipping and bringing down costs associated with it.

Source: RailNews