SUMMARY
During the first four days of festive sales 2022, ecommerce platforms clocked sales worth INR 6,000 Cr per day, a 5X jump from non-sales day GMV
Interestingly, non-metros are driving around 80% of ecommerce sales this year, with Tier 2 locations and beyond accounting for 60% of overall sales
During his masterclass at Inc42’s The D2C Summit 2022, Sandeep Dinodiya, CTO at Pickrr decoded festive logistics, including increased order volume handling, inventory stocking and more
India is in the midst of a four-month-long festive season (September-December 2022), a time for blockbuster sales when brands go all out to strike gold. Unlike the previous two years, when businesses were muted due to the pandemic, consumer sentiments are steadily rising this time despite inflation woes.
According to recent media reports, the Confederation of All India Traders (CAIT) expects a 60% business growth for the 2022 Diwali season compared to INR 1.25 Lakh Cr last year.
Meanwhile, a report by consulting firm RedSeer showed that ecommerce platforms in India amassed INR 24,500 Cr ($3.5 Bn) during the first four days (Sep 22-25) of the festive season sales, nearly 1.3X higher than 2021. It further notes that ecommerce platforms are clocking sales worth INR 6,000 Cr per day during the festive sales this year, a 5X jump from non-sales day GMV.
“Different sentiments are at play during the festive season. People buy gifts for family and friends, restock their wardrobes, and purchase home décor items and electronics goods, which lead to a huge rise in D2C sales,” said Sandeep Dinodiya, CTO at Pickrr, a third-party logistics (3PL) provider.
He has rightly captured the consumer mindset.
Around 66% of shoppers intend to buy from D2C websites this year, says a report by the digital marketing firm The Trade Desk. That D2C brands will lead the sales boom is happy news, proving that the direct-to-consumer business model is no pandemic fad. It has gone mainstream and appealing to customers at large. No wonder the Indian D2C opportunity is expected to cross $302 Bn by 2030.
But people will soon look past the bells and whistles and focus on a single factor – a seamless user experience from product discovery to doorstep delivery. As hassle-free, on-time delivery is a key component of all customer-facing functions, this is where 3PL aggregators have a critical role to play.
Dealing with the festive surge can be a logistical nightmare for D2C brands, especially as they don’t do it in-house.
“3PL companies can help streamline the logistics needs of D2C brands, from route mapping and shipping to inventory control and warehousing, last-mile efficiency, RTO (return to origin) resolution and more – all at competitive pricing,” said Dinodiya.
Speaking at the third edition of The D2C Summit hosted by Inc42 in September this year, Dinodiya elaborated on how D2C brands must leverage the latest technology to execute time-bound and quick deliveries during the seasonal rush.
Watch Dinodiya decode festive logistics, including increased order volume handling, inventory stocking and mastering the art of shipping, delivery and managing customer expectations.
Third-Party Logistics: A Key D2C Enabler During The Festive Rush
Consumers today are spoilt for choice, and customer loyalty is dipping drastically. As the competition intensifies, D2C brands are constantly looking to build and improve the loyalty factor to boost customer retention and business growth.
“One way to achieve this is through same-day/next-day delivery à la Amazon,” said Dinodiya.
But it is easier said than done. Hence, 76% of Indian D2C brands seek expert help and leverage third-party logistics instead of developing and managing the logistics unit in-house.
A quick look at the pros and cons will help one understand things better.
While brands have complete control over in-house functions, the challenges of logistics are many.
“For starters, a company requires the right tech stack to set up the process and scale up if necessary. Add to that rising fuel costs, poor roads or the lack thereof, and multiple warehouses and associated personnel costs,” Dinodiya elaborated.
The expenditure shoots north for D2C brands already on tight finances. And expenses will be compounded when they scale up.
On the other hand, Indian third-party logistics players leverage AI/ML-driven predictive tech and analytics to provide a bouquet of services to ensure a 24-48-hour delivery window.
“3PL services include supply chain management, warehousing at convenient locations, efficient route optimisation, real-time order tracking and on-time delivery. All these significantly boost a D2C brand’s ability to cope with the festive rush,” said Dinodiya.
Knowing The Customer Is Key To Inventory Management
During the festive season, big sales events like Amazon Great Indian Festival and Flipkart Big Billion Days run side by side, along with sales running on a D2C brand’s apps and website, leading to a surge in order volume. Interestingly, non-metros are driving around 80% of ecommerce sales this year, with Tier 2 locations and beyond accounting for 60% of overall sales.
The simple solution would be to stock inventory at numerous warehouses in multiple locations to ensure same-day/next-day delivery without hassles. But this is a very costly affair. And given the onset of a funding winter at home and abroad, D2C brands must find a cost-efficient solution.
“A thorough understanding of customer behaviour and aspirations are critical to a D2C brand’s success. Know your customers, the geographies they are ordering from and the kind of surge expected. Keep the warehouse relatively close to your customers to reduce turnaround time,” Dinodiya pointed out.
This is where consumer data analytics should step in to help derive insights into a person’s shopping behaviour and ultimately the kind of inventory required for each area. Failing which D2C brands may face missed delivery dates, expensive RTOs and loss of valuable customers.
Of RTO And Fraud: AI-ML Comes To The Rescue
Return to origin orders or RTO are a big pain point for D2C brands. There are several reasons for an order ending up as RTO.
Some of the reasons include consumers often giving into impulse buys and changing their mind later on, especially when they choose COD. Or when a last-mile partner is unable to complete the delivery as the address is incomplete and/or wrong.
Fraudulent purchases on the other hand are a much more serious problem. Instances of ecommerce fraud can include using bots to place orders to block a rival’s inventory, promo code misuse, card testing fraud, friendly or chargeback fraud, refund fraud, identity theft or account takeover fraud, interception fraud, among others.
“Return orders double the shipping costs and tend to block inventories, thus hindering sales during the festive rush. This could make life extremely difficult for D2C brands, especially those new to the business,” Dinodiya emphasised.
Most consumers still prefer COD. If you can convert them to prepaid by giving additional discounts, there are higher chances that they will keep your product instead of returning it, added Dinodiya.
“When dealing with fraudulent or bogus customers, D2C brands must protect themselves by leveraging AI-ML to ensure authentication of a user (email address, delivery address, phone number, etc). Additionally, they can leverage a customer data platform or CDP to learn of a customer’s behaviour on other platforms to get a sense of whether they’re being genuine,” Dinodiya advised.
Catch all the sessions and insightful conversations from The D2C Summit 2022. You can find the takeaways from some of the most prominent names of the D2C community right here at the Inc42 Academy.
