Amazon India and Walmart-owned Flipkart are ramping up warehousing and logistical operations with a sharp focus on smaller cities and towns, expecting an uptick in sales in the coming festive season amid a pandemic cloud
Bengaluru: Amazon India and Walmart-owned Flipkart are ramping up warehousing and logistical operations with a sharp focus on smaller cities and towns, expecting an uptick in sales in the coming festive season amid a pandemic cloud.
A quicker rebound in online sales after the lockdown lull, along with higher demand from buyers and on-boarding of more sellers in tier-II and -III towns, is prompting e-commerce companies to take up larger warehouses in a multi-city expansion strategy.
It’s a lesson they drew from an analysis of buyer and seller profiles during their recent sales.
The covid-lockdown has not only created new demand from customers in small town India but also seen higher numbers of sellers listing on e-commerce platforms from beyond the metros.
Amazon India is adding 10 new fulfillment centres in both new cities like Patna, with high density of sellers, before the festive season sales in October and expanding some of its 50 odd existing centres.
Business-to-business commerce firm udaan, which has nearly 10 million sq. ft of warehousing space, 60% of which is in tier II-III cities, has been looking at a mix or ready and built-to-suit warehouses.
Meanwhile, Flipkart’s strategy is a combination of urban, regional, and in-city storage facilities, taken on long-term and short-term leases.
“We are making significant efforts to bridge the gap between India and Bharat, and as smaller towns are witnessing high traction for e-commerce, we are expanding our supply chain accordingly," a Flipkart spokesperson said.
Ekart, Fipkart’s supply chain division, delivers over 40 million shipments a month and employs over 120,000 people, including delivery executives, sorters and pickers.
“udaan has been a big differentiator in solving problems for the long-term. We have expanded our warehousing capacity with a bottoms-up approach in terms of demand. In the next 2-3 years, the kind of space requirement we will drive will be huge and in varying formats," said Sujeet Kumar, co-founder, udaan.
Amazon and Flipkart’s sale events in August helped them gauge demand that may be generated during the festive sale event. E-commerce firms are trying to ensure better infrastructure and technology, keeping social distancing in mind, to take care of a spike in demand before hitting the festive sales.
The Prime Day sale saw more than twice as many customers sign up for Prime membership than in the 2019 edition, and over 65% of the new members came from outside of the top 10 cities.
“Since the lockdown, we saw a spike in customer orders and had to scale up our capacity to serve them across the country. Our fulfillment centres will serve higher demand for which technology scale up is critical," said Akhil Saxena, VP, customer fulfilment operations, APAC, MENA & LATAM, Amazon India.
Saxena said the company has made more than 100 changes operationally to deliver in terms of technology, processes, delivery and transportation.
Amazon is also enhancing sortation and transportation capacities. With daily cargo and passenger flights reduced, inventory placement has become critical where it is trying to place the inventory close to the customer.
“…With social distancing, there is a need to expand capacity and build more physical space so we can to receive and store inventory. We have to build more capability for ground transportation network and last mile delivery with partners third party carrier partners and we are working on a forecasting model as we prepare for the big day," Saxena said.
Chandranath Dey, Head - Industrial Operations and Business Development, JLL India said top e-commerce companies are looking at larger, built-to-suit (BTS) or ready warehouses to get economies of scale.
“Compared to even last year, e-commerce companies have become bolder in activation and take-up of space and the sizes are becoming bigger, multi-city as much of the demand is coming from smaller cities," Dey said.
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