Think direct-to-consumer (D2C) brands, one of the most happening segments in the pandemic-hit world of consumer retail, and the concept of LPaaS (logistics platform as a service) is bound to pop up as a core connector between sellers and buyers.
In the past year and a half, online shopping has soared for the sake of safety and convenience, products (both essentials and non-essentials) have flown off virtual shelves and order life cycles have been managed at the backend through agile digital commerce solutions. But the sole physical touchpoint between a consumer and a company — the timely arrival of the purchased goods — still continues to impact a brand’s growth and credibility. In essence, a brand that delivers fast and more consistently is better received than those with erratic delivery schedules even if their products are superior.
Best-in-industry logistics practices are difficult to master, especially by cash-strapped small and medium businesses and young startups, which are still struggling to cope with frequent lockdowns in many states along with a limping supply chain. From efficient packaging to quick shipping, safe handling and optimum fleet utilisation, from affordable warehousing and smart inventory management to transparent last-mile delivery and robust reverse logistics, the list is too long and varied to be handled without experts’ help.
Add to that the inevitable comparison with ecommerce behemoths like Amazon and Flipkart offering same-day and next-day deliveries even in the middle of a prolonged global crisis. Such challenging circumstances put brands under pressure, and many jump on the marketplace bandwagon in spite of high fees and near-zero access to customer data. After all, companies registered on ecommerce marketplaces get full support from these platforms for order fulfilment, and it helps build customer trust and loyalty.
Interestingly, the pandemic witnessed yet another trend as consumers shifted to dedicated brand platforms for better deals, discounts and company-specific loyalty programmes. According to the Ecommerce Trends Report 2020 by NASSCOM, brand websites saw 88% growth in order volume compared to 32% on marketplaces.
Experts think that digital-first brands need to capitalise on this trend and develop full-fledged online platforms on their own to build a solid market presence and a loyal customer base for sustainable growth. This is becoming increasingly important as marketplaces do not provide user data (data-driven insights are crucial for growth strategies) or add brand-specific deals to product pricing to reward loyal customers. But letting go of the logistics support of a marketplace is difficult as most D2C brands lack the infrastructure and resources to build these complex operations.
This is where ecommerce enablers step in to help homegrown brands. Players like Delhi-based Pickrr, Ecom Express, Delhi-NCR based Shipway are offering end-to-end logistics solutions for cost-effective and hassle-free pan-India delivery.
“When it comes to small and medium brands, they face a multitude of problems like low supply chain visibility and inaccurate inventory information. But the main challenge lies in streamlining the supply chain across different marketplaces and sales channels to decrease order turnaround time while keeping logistics costs low. And that is what we are trying to solve,” says Rhitiman Majumdar, cofounder and CEO, Pickrr.
Driving Logistics Through AI-Powered Analytics
Gaurav Mangla (CTO of Pickrr) and Ankit Kaushik (COO) became friends when they worked as associates for iRunway, a tech and financial services consulting firm. Then the duo set up Optimizedbit, a SaaS hiring platform, in 2014. But when shifting their base from Bengaluru to Delhi in the same year to grow their startup, they had to deal with several courier companies for the first time.
The move was not hassle-free. From researching cost points to manual tracking of items, the duo came across multiple challenges and noticed how the lack of efficiency and coordination plagued the sector.
To solve these pain points in the logistics sector and tap into the market potential, they brought on board Rhitiman Majumder (CEO) and founded Pickrr in 2015. The trio is now focussing on AI-powered optimised logistics solutions to improve customer satisfaction and sales volume.
Pickrr offers customised solutions for ecommerce companies and D2C brands, integrating any platform, website or marketplace storefront for a seamless experience and providing real-time updates on shipment status.
The company uses an in-house recommendation engine that provides courier recommendations, helps reduce delivery failures and enables to build marketing strategies based on the analytics and insights offered to each client through a dashboard.
The engine uses more than 50 parameters to find the most efficient courier partners based on a brand’s requirements. The dashboard also helps sellers reduce failed deliveries as it identifies pin codes with a higher rate of return/non-delivery and recommends turning off cash-on-delivery (COD) options for such locations. India still has a significant number of COD shoppers, and businesses constantly face return-to-origin (RTO) issues, which means they are forced to pay double freight charges on top of lost sales revenue. Pickrr, however, claims to have reduced the RTO challenge by 3-4% and the logistics costs by 20-30% for its customers.
The company further provides marketing insights to help penetrate specific regions. For instance, if the sales volume of a brand is particularly low in a specific location, the AI system recommends area-specific offers to lure customers.
The startup’s fulfilment solution, Pickrr Plus, is an AI-driven load analysis system that uses previous sales data to determine and notify the minimum inventory required at each warehouse. These warehouses are also capable of processing returns. With this new product, sellers can now offer 1-2 day delivery from Pickrr’s warehouses. The company claims that the solution will help improve conversion for D2C sellers along with a reduction in RTO percentages and improved customer satisfaction,
As part of its growth plans, Pickrr has already set up four fulfilment centres in Gurugram, Mumbai, Bengaluru and Kolkata and aims to open 10 warehouses by the end of the year. The company claims that it can now deliver packages in 48 hours in most Tier 1 cities. The logistics platform has also launched hyperlocal and cross-border deliveries and intends to focus on these operations more.
However, Pickrr took its time to reach these milestones. When the company was set up, India did not have too many third-party logistics providers, also called 3PLs, and businesses usually relied upon courier partners for shipping and last-mile deliveries. So, the bootstrapped and tech-driven logistics platform found it difficult to build trust and gain traction as traditional businesses were not sure how technology could optimise a largely manual and labour-intensive process like logistics.
Majumder told Inc42 that the team spent time with every customer it onboarded to make sure that they understood and had faith in the project. Today, Pickrr claims to have collaborated with more than 50K sellers, out of which 10K are D2C brands. The company delivers nearly 3 Mn shipments per month.
“Since our early days, we have realised the value of building customer relationships, and it has been our USP ever since. Pickrr has a customer-centric focus, and our primary aim is to meet their expectations,” said Majumder.
In December 2020, the startup raised $4 Mn, led by Guild Capital and Omidyar Network India. At the time, Majumder announced his intention to become a growth driver for sellers and help them deliver more efficiently.
What The Future Holds
Third-party logistics providers have come a long way in helping businesses reach a broader market and scale faster. However, handling the logistics burden for a business can always be a tricky proposition. Losing out on the bottom line due to inefficient packaging, inventory management, warehousing and delivery tracking affect every business in terms of costs and resources, especially when it comes to competing with faster and assured deliveries of ecommerce marketplaces.
“As a brand grows, logistics operations can quickly become tricky, leading to cost escalations and erosion of profits. At this juncture, businesses should explore opportunities to partner with a logistics solution provider that has expertise in end-to-end supply chain management. This will bring operational efficiencies and customer satisfaction in the long run,” Kaushik had earlier told Inc42.