Jabong partners with coffee shops and fuel outlets to expand delivery reach
We know that many of small towns or villages are not reachable easily so online retailers can’t deliver to customers in these places because of poor road connectivity and fear of robbery. First time in this industry Jabong has introduced a delivery service closest to door to door delivery i.e. called “Next-Door” service where customer can pick up their orders at the nearest coffee shop, petrol station or a tour operator.
Praveen Sinha is the cofounder and managing director of the Delhi-based online fashion retailer Jabong said that “We are sitting on supply chain opportunity”. This is run as a pilot now which is the most extensive initiative of its kind by an Indian e-tailing company. The trial for the pickup service will start in a week initially in 39 towns, among them are, Chandausi in UP, Murshindabad in West Bengal,, Udhampur in Jammu & Kashmir and Dahod in Gujarat state.
Praveen Sinha said that “Our hypothesis is that if we can provide convenient delivery support then there is potential to get 70% of our demand from non-metros. Whose company is only next to online fashion retailer Myntra, which was acquired by Flipkart earlier this year?
Jabong gets about half of its revenue from non-metro centres/towns and Sinha expects small towns that are not serviced by logistics partners to contribute additional 15% to 20 % to sales once the pickup service scales up. India’s online retail industry is estimated by Crisil to be worth more than Rs 50,000 crore in 2016, but it is still hobbled by infrastructure issues. For example, currently logistics firms in India are covering only a upto15, 000 out of the over 1, 50,000 pin codes that are there in the country. Even where logistics are available, orders above a certain sizes or value are not delivered due to several other reasons. Also, cash-on-delivery, the mode of payment which was chosen by about 60% of all online shoppers, is not an option in many of these locations as it was removed after introducing initially due to theft, robbery etc. But growth for online retailers is coming from areas where physical connectivity is missing but not internet connectivity, especially through mobile phones due to the growth of 3G/4G networks. At Jabong, for example, mobile users are now contributing about 25% of its orders, up from < 5% about 15 months back.
Manish Saigal the Managing Director at advisory firm Alvarez & Marsal said that “In 5 years of time, the volume of orders from smaller towns will outstrip the demand from tier-1 cities”. The problem for online retailers currently is the service ability of demand in these smaller markets is very limited at present.
Companies have beginning to experiment with different new service ideas to overcome this challenge. Amazon India is running a pilot in Bangalore where its customers can pick up orders from small retail shops that dot the streets. It is also testing out a pickup service in Delhi and Mumbai, where customers can choose to claim their orders from Bharat Petroleum’s fuel retail outlets. In May online marketplace ShopClues partnered with offline payments and remittances company Suvidhaa to collect cash payments before delivery of product from online buyers through the latter’s huge network of > 65,000 small retail outlets spread across about 2,500 smaller cities and towns.