Delivery: Issues and solutions

In this post we are going to look into issues of delivery. This is one of the biggest problems in online retailing and we need to study this in detail. We will go into different models of delivery and see some examples too.

1.) Digital distribution : This is the easiest form of delivery. You pay and start using it. It could be used for many digital products as well as services. This is still in infancy in India. A lot more work need to be done. The advantage is that no  physical objects  are shipped and so the delivery cost is zero.

2.) Another form of digital distribution is that of sending the tickets, codes, or coupons. This could be send as email or can directly printed from the webpage. For example  reservation of seats /berths in Indian railways.

3.) Will Call. It is mostly used to book tickets for movies.  Popular in US and UK, now used  in India too.

4.) Shipping and Drop-shipping. The most costly form of delivery and at the same time the most popular  in India. Almost 100% of the physical  items ( like books, bags, cloths, etc)  that I have ordered in the last 15 years from Indian ecom sites were delivered in this model.

5.) Bricks and clicks. Make use the best of  both worlds, online as well as physical stores. One example is the Kirana stores. Not very popular in most part of India.

Now let us look at some retail shops.

For example take the case of cloths. One advantage of a physical (Bricks) textile shop is you can try the cloths and see whether it is a good fit.  What advantage do an online  store have? You have a wider selection. You can also do the selection from the comfort of your home.  Which delivery method will satisfy the customer?  Though many online stores offer a replacement in case the delivered cloths are not a good fit,  the customer has to take the hassle of sending it back. Why not offer "bricks and clicks" method of delivery? What are the advantages of this?


Let us assume that we have an online store selling cloths. Let us give the customer an option of making a wish list and the webstore ships the goods to a local textile store where the customer can visit in a particular time period to try out the cloths. . The advantage is that the customer can call the shop and then fix a time for his visit. Or the textile shop can call the customer and say that his goods have arrived and he can come in a particular time period, say "two weeks from now" to tryout the cloths. Customer can make his payment in the shop and also update online with  bill details.

Now let us consider the case of online grocery shop. This is where the margins are very thin. Are the customers ready to pay the cost of home delivery?  Say you have no habit of purchasing anything in bulk, the home delivery will  become a costly affair. Bricks and click method will work wonderfully here. For example if the shop is on your way to home and what you have to do is to pay the amount and pickup the goods. No queues, no waiting and you have several payment options like paying online or COD. By adding several shops to the network we can create a network chain and customer can choose a convenient shop for picking up his goods.

Now consider the case of selling perishable items, like food,  raw meat or vegetables.  We have added another constraint, the time required for delivery. Again Bricks and click model can work wonders here. But to make it work we need a few  infrastructural as well as cultural changes. But let us hope that people will see this as an opportunity and will come out with different business models.

Now most of the shopping happens through courier agencies. There needs to be a lot of improvement in the way they operate. I have the unfortunate opportunity to visit some of the courier agencies to collect goods. I can never forget the chaotic situation inside their office. I wonder how they make the deliveries.

Let me go back to the method of delivery we have used in our first ecom site in 1999.

First let us look at the cases of delivery of Christmas cakes. We had signed up with a cake manufacturer  who had a wide network throughout Kerala. We only handled that last mile delivery. He had to make sure that enough cakes are distributed to the shops in his network. It worked wonderfully. A good example of Bricks and click model.

My second example is "Onapudava". We wanted to distribute the finest as well as rarest type of Kasavu Saree and Mundu. So we made sure that we had enough of that ordered at least an year ahead from some villages where high quality pure handicraft items were made. There was no way people could have got it unless they visit the best shops in some cities.  We handled the shipping directly from our office. One person will travel with the goods on a train everyday from Trivandrum to Kasarcode. The people who handled the last mile delivery will collect it from the station.

A failed business

Internet users in India is growing fast and so is the online business. There are a lot of startups out there who wanted to start one. As a society we need a lot more than what we have today and it s a good thing that people are coming out with several ideas .  But do we understand the issues in online retail business? Are we aware that creating a Ecommerce site is only a small part of the problem. 

In the year 1999, before the dotcom crash, we decided to launch our first online business. I wanted to share some of my experiences running this business.

By the end of 1990s the whole industry was buzzing with excitement on the prospects of dotcom and not having a dotcom business looked like plain foolishness. That is when we decides to launch our first online business. We had several brain- storming sessions to decide on what  problem that we wanted to solve. Several suggestions were made but we rejected almost all because none of them looked sound enough. Finally we  came across a problem that we know not many in the industry will come across because we were uniquely positioned.

At that time we were  working with several non resident Keralites. We were trying to build a network of NRKs as well as those who returned to Kerala after living elsewhere for a long time.  Though this was part of a non-profit activity, it gave us some unique insights into the problems that they faced. Most of them are away from their family and they do miss the celebrations back home like Onam, Vishu, Perunnal, Christmas, Easter, etc. They cannot take part in marriages, birthdays, and other family celebrations. Is there a way they can share their happiness with their family back home?  For example is there a way they could give a "Onapudava" to their family members even when they are away? Give a gift to wife on the wedding anniversary day? Give a gift to parents on their birthdays? They may not be able to attend a marriage but should show their happiness by sending a gift to the couples on the day of marriage.

So we decided that the NRKs should have a website where they could order gifts that will be delivered anywhere in Kerala. Will that solve their problem? No, we have to do something more than this to address the issue. On your father's birthday you want to send him some flowers.  It should be delivered in the early morning. It should be delivered with a greeting from the son. It should not be delivered by somebody from a courier agency, the delivery boy has no idea what he is delivering. It should delivered  by somebody who understand the relationship between the father and the son. So we decided that we should have our own delivery network throughout Kerala. Through our non-profit activity we were already connected with a lot of Keralites who were returned from Gulf. Most of them do not have an idea what to do next, so we decided to use them for this purpose. Who else is better to understand the pain of a non resident malayalee? We formed a network and trained them. One idea that came to us at that time is that the person who makes the delivery should take a photograph and this  can be send back to the Person who made the order. The mobile cameras are not that popular in 1999, so if this is not possible then we will alteast take a message from them.

This business failed after serving the NRK Community for almost five years. We decided to closedown because it turned out to be a very costly. The world was not yet ready for solving this issue. We need a lot more infrastructure to solve it. We understood this only because we tried to solve it by putting a lot of hard work and we learned a lot of lessons from it. There are several problems in ensuring the supply of quality products in time. This cannot be delayed, we need to make the delivery in time. For example the gifts send for marriages are delivered during marriage functions, not before that or not after that. Supply of goods are a big issue. For this to happen, the order has to come well ahead of the function. We need to locate quality supplier in the near by locality and ensure that he supply the goods in time.

For Onam and Christmas we faced another issue. How to predict the number of orders?  Usually there are a huge number of orders and how to ensure that all orders are delivered in the days of celebration?  More over in 1999 there was no cloud computing and the servers stopped working when more people were trying to order from the site. This again affected the predictability. In 1999 Ecommerce was still a young science.

I will continue the discussion in my next blog.