The e-commerce giants, Amazon and Myntra are paying great attention towards the friendly neighbourhood Kirana Stores for handling the last leg of their deliveries. The e-commerce companies have significantly increased their use of this platform for last-mile delivery which in return helps them to reduce their delivery staff or they also have an option to engage the staff in other tasks. As per industry’s estimates, Amazon usually engages its neighbourhood store network for around one-third of its deliveries whereas Myntra for around two-thirds.
At the end of 2017, Amazon’s ‘I Have Space‘ (HIS) program grew about 40% year-on year to 17, 500 neighbourhood stores in around 225 cities in which it holds partnership with local stores which agree upon delivering products to customers within a radius of 2-4 Km.
When talking about Flipkart-owned Myntra, it’s been said that it has expanded its ‘Mensa Network’ to 6,200 stores in around 50 cities, as it was launched in April last year. Myntra has fulfilled around 60% of its orders through the stores. As per the statements made by Flipkart officials, it’s been said that Flipkart’s alternative delivery network which basically includes Apollo Pharmacy Stores handles around 20-30% of its deliveries during peak festive season sales.
However, the irony is that everybody thinks that these e-commerce giants are impacting the small kirana stores but the reality is that the programs initiated by the shopping websites helped the small kirana stores in finding a new use case for them, where they can also get predictability of the revenue.
It is generally observed that the fashion retailer’s neighbourhood store partners earn around Rs. 15,000 a month and with higher volume of deliveries this income rises. As far as the amount of deliveries handled by its store network are concerned, Amazon did not disclose the same.
Reducing Staff Count
As per the company, it’s been said that it chooses the mode of transportation based on various factors such as time commitment, fulfilment cost and past performance. On an average, Amazon’s store partners deliver 20-30 packages in a day which is equivalent to the average deliveries handled by the last mile delivery staff in the company. An Amazon India spokesperson said that these local entrepreneurs understand their area pretty well and have a good and clean image in their neighbourhood which in turn helps them to efficiently deliver and receive products.
Amazon is thinking of branding the IHS pickup stores as ‘Amazon Pickup’ for easy visibility, the company said. The head of Amazon Prime in India, Akshay Sahi had told in an interview that the company was looking to increase its pickup points to improve the last-mile service for customers as well as the availability of these pickup points during online checkout.
Amazon has also decreased the size of its last-mile delivery staff to 4,000 from 12,000 in 2016. Myntra mentioned that it has been able to divert much of its delivery staff to handle tasks such as try-and-buy orders as well as quality audits during product returns to know the reason behind customer’s dissatisfaction.
Apart from the Kirana Stores, the neighbourhood outlets being involved in last-mile deliveries include pharmacies, mobile accessory stores, tailoring shops and laundries. Investments in building these networks includes operating costs such as deputing field staff for delivering and reconciling orders, creating apps for the store partners, and sharing of the training content on customer management. According to industry experts, the large e-commerce companies such as Amazon can perform better in offering financial services such as credit or working loans to kirana stores, as well as providing inventory.
According to Guruprasad Srinivasan, President of Dependo, Logistics, a subsidiary of Quess Corp, the e-commerce shipments handled through the neighbourhood store channel has increased to 7% from 5% in the last year. Online grocery store, Big Basket poses a similar network of partner stores two years ago which is named ‘AasPaas’, but it discontinued this name after seeing little customer traction. According to TN Hari, the head of human resources at Big basket, they stopped using the old name AasPaas because they didn’t find many customers interested in that option.