What India Should Learn From China to Resolve Home Delivery Issues During the Lockdown
India is on its third day of the nationwide lockdown that was announced by Prime Minister Narendra Modi on Tuesday, directing over 1.3 billion people of the country to stay at home. The lockdown was meant to limit the spread of Novel Coronavirus (officially called SARS-COV-2) that has affected over 681 people and took 12 lives in the country so far. However, one big problem that has emerged is the lack of essential items and even food for many Indians.
China also imposed a lockdown from January 23 to restrict at least 760 million people from going outdoors, as reported in the New York Times. In China, deliveries of groceries and other essential commodities continued during the tough time for its citizens. Here, despite assurances that essential supplies like groceries will be available, many people have had a tough time in getting to stores, or getting deliveries.
The combination of consumer digital maturity and digitally supported supply chains helped China’s resilience at the time when the coronavirus outbreak was at peak, Harvard Business Review noted in a report. The country has the infrastructure that allows deliveries of online orders within as little as 20 minutes following their checkout.
Its home-grown e-commerce giants, including Alibaba and JD.com have enabled consumers to easily purchase almost anything using the Internet. All this enabled online portals to ship medicines and food items even shortly after the first major lockdown of the country was imposed in Wuhan.
In contrast, India faced major delivery outages that surfaced even before the Prime Minister announced the nationwide lockdown and tested its pilot through a 14-hour self-imposed curfew coined “Janta Curfew”. Hardships in deliveries are there despite being the fastest growing e-commerce market across the world.
A report by India Brand Equity Foundation had projected that the Indian e-commerce market will grow to $200 billion (roughly Rs. 15,08,200 crores) by 2026, up from $38.5 billion (roughly Rs. 2,09,600 crores) reported in 2017. Similarly, a study conducted by the Competition Commission of India (CCI) highlighted that a large number of brick-and-mortar restaurants in the country have gone online between 2016 and 2018. The massive growth in smartphone users and Internet subscribers in the Indian market has also pushed e-commerce adoption to new levels.
However, that growth potential hasn’t helped Indians receive on-time delivery of their orders during the lockdown. Platforms including Prime Now that are meant to provide fast, two-hour deliveries in certain areas across the country aren’t providing any delivery slots. Likewise, customers in many parts of the country aren’t able to place their usual breakfast, lunch, and dinner orders through aggregators such as Swiggy and Zomato.
Partial restore, but of no use
Grocery delivery apps including Big Basket and Grofers faced difficulties in fulfilling consumer purchases since the lockdown started on Tuesday evening. Although Walmart-backed Flipkart did restore its grocery delivery service in many cities after hours-long suspension, it’s yet not giving deliveries anytime within four to five days.
Customers have flooded social media sites including Facebook and Twitter with complaints pertaining to failure of online orders. Various affected customers also highlighted the fact that the government ensured “seamless delivery of essential items” during the lockdown to convince people to stay at home.
“I tried not hoarding stuff when this was beginning to happen — thinking that it would be unfair to people if supplies start running out from the stores,” said Megha Gupta, a human rights lawyer, who’s trying to order pulses and fresh vegetables for her home through online marketplaces but failed. “Also, we never really thought that in a city like Mumbai delivery apps would stop working.”
Major e-commerce companies including Amazon, Big Basket, Flipkart, and Grofers issued statements earlier this week clarifying problems with their delivery services and cited warehouse shutdowns as a key reason for their incompetence. Some entities also reported violence being faced by their delivery agents while reaching out to customers.
“We continue to strengthen our supply chain in a safe and secure manner for our employees and consumers alike, and will leverage our efficient and robust delivery network to make products available to customers across the country and support the nation in this time of crisis through sanitised and safe supply chain,” Flipkart CEO Kalyan Krishnamurthy said while announcing the partial restoration of grocery deliveries earlier this week.
Nevertheless, online marketplaces and delivery aggregators and in India have so far by large failed to fulfil orders.
One of the prime reasons for the failure of home deliveries in India is the gigantic demand that has been raised by customers across the country since various retail stores are closed or are operational just for few hours to avoid any panic during the lockdown.
E-commerce portals in the country aren’t able to meet the growing demand due to short attendance of delivery partners and closure of several warehouses, one of executives working at Amazon told Gadgets 360 on condition of anonymity. Companies such as Amazon and Flipkart have also started hiring new delivery agents to address growing demand-related issues at some major locations.
Automation as one key solution
Satish Meena, a Senior Analyst at Forrester, sees limiting the stock-keeping units (SKUs) as a temporary solution to avoid panic among customers. “This will create a sense of relief as, once customers see an out-of-stock ticker under most items, the panic builds,” he said.
But what India needs to scale the existing home delivery model on a permanent basis is automation in the delivery process. That’s so far lacking in all e-commerce companies in the country. This is also unlike China where you’ll see delivery using drones and robots as well as various artificial intelligence (AI) powered solutions enabling digital inventory systems.
“In the gated communities and neighbourhoods of the larger cities in China, residents have organised small groups of volunteers via group chat apps to receive supplies at the gate for the whole community, box them for each household, and deliver them to people’s doorsteps,” said Anindya Ghosh, Heinz Riehl Chair Professor of Technology, Analytics and Marketing at NYU Stern School of Business. “This is almost certainly something that can be done in many parts of India as mobile text messaging apps are also very popular in India and can enable this kind of grassroots coordination in large housing complexes and gated communities of India.”
Digitalising the process of warehousing and delivery would have helped online marketplaces fulfil growing demands at the start of the lockdown when most of the delivery partners don’t want to step out — mainly to avoid being a soft target of policemen and get vulnerable to SARS-COV-2.
Recently, state police forces started allowing deliveries for online portals. Almost all major e-commerce companies also adopted “contactless delivery” to address the concerns of getting infected while delivering orders to customers.
Nonetheless, getting curfew passes from authorities to avoid strict action of the police is still a pain for most of the delivery agents. Customers also don’t bother about opting for the delivery service that would enable an agent to leave orders at a door. This is in contrast with China where alongside contactless delivery, meal deliveries are fulfilled alongside temperature readings of restaurant workers and courier delivery boys, as noted by Vox. Some drop-off stations were also established by companies such as JD.com to enable safe deliveries in affected places.
Offline needs to go online
Most of all though, India still has a large base of traditional retail stores. This means that while there is a large number of online shoppers, the country still has a significant base of people purchasing goods offline. A recent report by the World Bank underlined the domination of the offline market in the country by saying only online is only 1.6 percent of total retail sales in India, citing data from research firm eMarketer.
In such a scenario, e-commerce companies are required to bolster their logistics and bring new offline retailers on board to overcome the ongoing challenges. JD.com demonstrated an effective delivery model last month while serving its customers in Wuhan. The company also provided additional services to merchant partners in the entire Hubei province to ensure continuous delivery of orders in affected areas.
China already had a wide online retail market that’s worth around $2 trillion (roughly Rs. 1,50,59,500 crores) in 2019, according to a report by eMarketer, accounting for 35.3 percent of total retail sales. This has helped the country make its people ready for easily moving from offline stores to e-commerce portals.
Meena of Forrester noted that India could address its home delivery issues with the given market size simply by forming a central coordination committee that would include representatives from central government, key states, offline grocery retailers, online retailers, e-pharmacy, and food delivery companies. This is believed to ensure a smooth flow of information from the authorities to online marketplaces and their delivery agents as well as help accomplish online orders using the existing logistics infrastructure.
“E-commerce in India is still a very small part of total retail, but last-mile delivery capacity (which online players possess) must be used efficiently to make things normal for millions of households and to ensure that, if required, both the government and citizens are ready to extend this e-commerce and delivery trajectory further,” the analyst said.
Experts believe also that the lockdown would help India expand its e-commerce market and make home deliveries more common for the masses. Moreover, it is likely to bring new employment opportunities in the country and set the pitch for newer experiences and services.
“I think because of social distancing, the total addressable market (TAM) for e-commerce and online shopping will grow significantly in India during this crisis,” said NYU Stern School’s Ghosh. “Further, the data from China shows that the numbers will stay expanded even after the crisis as more people are exposed to the ease and fun of online shopping.”