Logistics Challenges Faced by Online Retailers in India

Running head: SUPPLY CHAIN MANAGEMENT & INTERNATIONAL MARKETING
SUPPLY CHAIN MANAGEMENT & INTERNATIONAL MARKETING
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1SUPPLY CHAIN MANAGEMENT & INTERNATIONAL MARKETING
Table of Contents
Introduction................................................................................................................................3
Objective and framework...........................................................................................................3
Logistics Challenges faced by Online Retailers in India...........................................................4
Potential solutions......................................................................................................................9
References................................................................................................................................12
Introduction..............................................................................................................................15
Amazon Model.........................................................................................................................16
Amazon Development Process................................................................................................18
Reason for success...................................................................................................................21
References................................................................................................................................24

2SUPPLY CHAIN MANAGEMENT & INTERNATIONAL MARKETING
Part A

3SUPPLY CHAIN MANAGEMENT & INTERNATIONAL MARKETING
Introduction
Internet has emerged as one of the biggest technological development of the recent
era because of the ease that it had offered in almost every aspect of life (Dutton & Blank,
2015). From education to healthcare and homes all the sectors have been benefited by the
emergence of the internet. One of the sectors that have witnessed drastic change is the
business world. The association of the business and internet have given birth to different
terminologies such as e-marketing, e-filling, e-care and several others. One of the most
prominent terminologies is the e-retailing that stands for online retailing.
Online retailing refers to the B2C (business 2 consumer) format that is undertaken
through means of online (Verma, Sharma & Sheth, 2016). In simple words, online retailing is
the selling and purchasing of goods, services and actions through online means. According to
the data provided by Statista.com, the number of consumers of online retailing was around
1.66 billion in 2017. The above figure is greater than the most populous country that is China
which have a population of 1.411 billion. In terms of money, the total sales from online mode
exceeded the amount of 2.3 trillion US dollar and is projected to grow up to 4.48 trillion by
2021 ("Topic: E-commerce worldwide", 2018). Asia pacific contributed 12.1% of the total
figure discussed above. Hence, it becomes crucial to assess the market of Asia Pacific and the
paper is aimed at doing the same. Therefore, the paper has taken the second most populous
country of Asia and World as the geographical domain of study.
Objective and framework
The section above has established a base for the online retailing and selected India as
the geographical domain for the study. Hence, it is crucial to identify the factors that are
constraining the growth of online retailing in the Indian Market (Mathew & Mishra, 2014).
The barriers of online retailing in India is extensive that includes legal issues, working

4SUPPLY CHAIN MANAGEMENT & INTERNATIONAL MARKETING
barriers, returns & cancellations along with several others. One of the most prominent
challenge that is being faced by the online retailers in India is the logistics challenge. India is
greatly dependent on the rural areas and when the logistics is unable to reach in those rural
areas, it is forcing the online sellers to limit themselves to limited zone in a very large market
of over 1.3 billion people (Thakur & Srivastava, 2015). Similarly, there are multiple other
challenges that needs to be identified and mitigated. The paper in discussion has detailed the
challenges faced by the online retailers in logistics.
The following section is dedicated towards identification of the challenges faced by
the online retailers in India. The discussed section will detail the challenges and have been
succeeded by the mitigation actions for the identified challenges before summarising the
discussion to conclude on the report.
Logistics Challenges faced by Online Retailers in India
The prominence of the online retailing has been established in the sections above
along with the challenges faced by the online retailing in India has also been established. One
of the most prominent challenge is logistics and the following paragraphs presents the
challenges faced by the online retailing industry in India because of logistics.
Increased cost is primarily the most concerning challenge for the logistics in India.
The Indian online retailing market is estimated to be of around $ 13 billion and every one of
the online sellers wants to get something out of it giving birth to high level of competition.
Hence, the firms with objectives of becoming competitive leaders in the Indian online
retailing market transports the products through airways which counts heavily on the firm’s
financial resources (Benerjee, 2019). Time is not the only issue with the choice of air
transportation but the snarled roads and lack of river transportation is also one of the
prominent reason for the choice of air transport. The Indian online retailing giant Flipkart as

5SUPPLY CHAIN MANAGEMENT & INTERNATIONAL MARKETING
well as the international retailing giant Amazon and most of the other online sellers chose the
air transport. However, the challenge of logistic does not ends with increased cost of air
transport. The commercial airlines serving as the logistic partner for the online sellers also
remove the parcels of the online seller to make space for the customers. The statement made
by Rahul Chari, the supply chain head of Flipkart, India’s largest online retailing service can
be taken in account to understand the challenge that is faced by the online retailers of India.
He quoted “It is unfortunate, but offloading does happen and we have to make sure our
delivery promises take that into consideration” (Bose, 2014).
Hence, in summary it would be justified to state that the discussed challenge that is
the increased cost of logistics is one of the most prominent challenge that needs to be
mitigated so that the online retailers can enhance their productivity and revenue.
Adoption of new technology is also one of the primary challenge for the logistics of
the online retailers of India. The challenge is not because of lack of technology as most of the
online retailers such as Amazon, Walmart and other mega giants are using technology with
the objective of enhancing their productivity but the reason is perception and infrastructure of
India (Thiyagaranjan & Ali, 2016). The perception in discussion here refers to the perception
of the online retailers as well as the customers. The online retailers prefer the pen-paper
method which has become primitive and unorganised. Furthermore, if the firm decides to
adopt state-of-art technology for enhancing their performance and productivity, the lack of
proper change management strategy and awareness about it develops constraints for the firm.
Change management is the method that ensures that the change that is being introduced into
the firm are smooth and efficient (Kalia, Kaur & Singh, 2018). Implementation of the new
technology or processes will induct changes to the conventional approach of the business
model and day-to-say practices. Furthermore, it resistance from the end-users is also major
challenge.