Millennium Post

The Net effect of sound logistics

The Net effect of sound logistics
The internet has come a long way over the decades and is continuing to make inroads successfully in the lives of people and industry. Yet, the pace of its movement is so speedy and mind-boggling that only very few can decipher its journey code to emerge winners in the race against time and space.

One of these leaders in such a race with the use of the internet is Deutsche Post DHL and Blue Dart Express, which are highlighting e-commerce solutions for the Asia Pacific region — including the massive Indian market — which is forecast to surpass the US and European markets in this regard.

By 2017, the Asia Pacific online market is expected to generate $1,052 billion in total sales, surpassing North America and Europe as the biggest markets worldwide with China and India contributing largely to this growth. The surge in e-commerce activities attracted global merchants to expand their e-commerce business to this region. A Shop The World online consumer survey by DHL e-commerce in 20 countries with 11,000 respondents highlighted global distance selling including market size and development, consumer attitudes & behaviour and cross-border shopping.

Opportunities for e-commerce in India are tremendous, where users are eager to start and increase their e-commerce activities. Currently, four-fifths of Indian consumers surveyed are distance-selling clients and although the number of orders is still below the global average, the future holds enormous potential.

The Asia Pacific (formerly DHL Global Mail) business has been rebranded as DHL e-Commerce Asia Pacific to better reflect relevance in today’s competitive e-commerce landscape. It has its presence in high growth markets across Asia Pacific (including Russia) and is poised to leverage on the economic boom to develop a unique service offering, including the predominant business being in providing B2C cross-border delivery solutions to online merchants, while continuing to build on the success of existing offerings by improving the features and opening of key trade lanes. It plans to extend service offerings along the entire e-commerce value chain such as e-facilitation and e-fulfillment.

DPDHL has chosen India to pilot the development of its e-commerce business model for Asia Pacific through its subsidiary Blue Dart Express by investing around 100 million euros within two years in infrastructure and development of fulfillment centres, multiple delivery and payment options as part of its aim to become the preferred global provider of e-commerce related services including e-fulfillment and e-facilitation. Its new service offering is expected to lay a strong foundation towards Strategy 2020, where the ambition is to be number one in e-commerce logistics and future product portfolio is to fulfill e-commerce customers’ needs including e-facilitation services, e-fulfillment, domestic delivery and cross -border delivery.

‘We have seen tremendous growth in India which is a billion revenue businesses for us and we hope the reforms introduced recently will help in this regard. We do hope that India will leap-frog from retail to e-commerce due to increasing demand from the rising middle class,’ DPDHL CEO Frank Appel told the media in Mumbai while noting that with global e-retail evolving rapidly, the next five years would see the world e-commerce sector growing by over 10 per cent per annum with Asia Pacific leading the way and surpassing North America and Europe as the biggest online market in the world. ‘As the leading logistics company with an unsurpassed global footprint, this is a huge opportunity for us to become the world’s leading provider of e-commerce logistics — for which we have a ready solutions infrastructure in India to pilot our solutions,’ he said while quoting DPDHL’s report Global E-Tailing 2025 in which, by 2025, e-commerce’s share of overall trade volume of emerging markets will be up to 30 per cent (40 per cent in developing countries).

Describing DPDHL as the largest postal operator in Europe including number one in international express, forwarding and logistics, Appel said, ‘Our plan is to further expand margins, lead in quality and service, and sustainably outgrow the market, besides also accelerating organic growth by an even stronger focus on emerging markets while being a global leader in e-commerce logistics and new organic growth opportunities.’

The company is eyeing 2020 ambitiously with plans to gain 30 per cent of emerging markets revenue share from 22 per cent today. ‘The parcel market is growing and structurally changing, with mainland China witnessing growth at 15 percent per annum, emerging markets at 11 percent per annum and mature markets at 7 percent per annum (all three by 2020). The borders between logistics and trade are diminishing with logistics companies venturing into e-commerce, even as new competitors are entering the market. Our global ambition for 2020 is to expand our success story on a global level by continuing to expand in Germany, gradual expansion in Europe, enlarging our service range in the Americas and Asia through Global Mail USA and Blue Dart India,’ he said.

DHL e-commerce Asia Pacific CEO Malcolm Monteiro said that with 250 million internet users, India’s e-commerce remained underdeveloped despite online shopping valued at 2.3 billion euros in 2013. This is expected to grow to 4.1 billion euros by 2018, a CAGR of 12.3 per cent in five years. ‘All countries across Asia are in different evolutionary stages of e-commerce and we need to adapt our service portfolio within the region accordingly. Lots of Indians prefer to pay COD or credit card,’ he noted.

Blue Dart Express Ltd MD Anil Khanna said that Indian e-commerce is growing rapidly due to internet penetration and usage is the key driver alongside rapid growth among the middle class, rising disposable income, high mobile penetration, changing consumer preferences, emergence of lower tier locations and specialized logistics offerings targeted at e-commerce requirements. ‘The size of the e-tailing Indian market can be seen in its 54 per cent growth from 0.2 billion euros in 2009 to 2.7 billion euros by 2015. The leading product categories bought online e-tailing includes laptops/ tablets (24.5 per cent), apparel (20.6 per cent), mobile phones (18.9 per cent), cameras (14.1 per cent), consumer durables (7.8 per cent), books (4.5 per cent), personal/ healthcare (3.7 per cent), home
furnishings (3.1 per cent) and other products (2.8 per cent).’

‘Leading players in the Indian e-tailing industry include: Flipkart, naaptol, Home shop 18, Amazon.in, healthkart, Fashion and You, eBay, snapdeal, myntra, JABONG, ShopClues and Pepperfry. E-tailing logistics are the linchpin of success and features express service providers (which include Blue Dart and others), dedicated e-tailing providers (which are a niche, dedicated express service provider delivering shipments of e-tailers only and do not have a spectrum of service, besides having limited geographical reach), and captive/ outsourced manpower (e-tailing players having their own logistics and traditional express logistics provider providing manpower to e-tailers.)’

‘Blue Dart Limited is working closely with leading brands, market place sellers and retailers to help them establish a sustainable e-commerce footprint and is therefore investing in the right infrastructure — including IT — to build the right model for consumers and sellers. We are adding aircraft (five boeing 757-200 freighters of 385 tonne capacity per night through 13 domestic hubs, seven aviation hubs, and 1,360 channel partners), infrastructure, automation, IT because the market is growing very fast and our e-tailing centres are where SMEs can store their goods and customers can buy online,’ he said. ‘We expect the first e-fulfillment centre to be ready by November 2014 in Delhi, before spreading to Mumbai, Bengaluru and other cities,’ he added.

Meanwhile, big money has already made an entry through Larsen & Toubro.  G Krishnamurthy, chief executive, L&T Infra Finance — a leading infrastructure finance company and subsidiary of L&T Finance Holdings Ltd — said that the company proposes to utilise this land for corporate purposes and potentially for back-office requirements of L&T Financial Services. He said that L&T Infra Finance, which was incorporated in 2006, had In barely seven years of being in business become recognised as one the foremost infrastructure finance Companies (IFCs) and, since 2011, as a public finance institution (PFI) by the Ministry of Corporate Affairs (MCA). As a testimony to strong credentials and sound operating performance, L&T Infra Finance enjoys AA+ credit ratings from both CARE and ICRA.

L&T Infra Finance is a leading provider of project finance and financial advisory services to companies in sectors that include power, especially renewable energy, roads, ports, telecom, power, oil & gas, he said, adding that L&T Infra Finance has recently started to expand its presence in industrial finance too and has setup a dedicated infrastructure debt fund (IDF) to focus on refinancing operational low risk projects.
Dominick Rodrigues

Dominick Rodrigues

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