By picking up and delivering goods from local stores, ecommerce companies don’t have to buy inventory and store in warehouses, which are huge costs for them.

E-commerce firms look to offer same-day delivery to cut costs
Atom Ecommerce Friday, June 08, 2018 - 10:28

Just when you thought everything is moving online from grocery, milk and fruits to vegetables being home delivered, the online to offline or O2O model appears to be the latest fad. In an attempt to adopt this omni-channel strategy, major online B2C players, at least in the fashion and lifestyle category, like Jabong, Myntra, Amazon and Paytm Mall are toying with the idea of same day delivery.

What works for them there is that by delivering the product from the enarest store of that partocular brand that has been ordered, it cuts down on the cost of first ordering and storing the product in their warehouse and then packing and making the delivery to you. These costs are very high in the context of the whole transaction. It is indeed a win-win situation for all, including the offline store, which need not rely on only footfalls in the store to gather business.

While fashion is being highlighted here as an example since the first movers here have been Myntra and Jabong (both under the same management), the model can easily be extrapolated to products like mobile phones, home furnishings and electronics and there are already some online-offline collaboration taking place in these segments too, possibly insignificant at this stage.

In the case of Jabong, the online player with the technology backing of the giant Google, Fynd has virtually perfected the art of integrating the offline and online inventories and has run a pilot operation with the setup. The offline inventories of some luxury brands are listed and displayed on Jabong Luxe and on Facebook Marketplace. Steve Madden, Superdry and Brooks Brothers are some of the labels on Jabong Luxe while on Facebook a whole of 330 brands can be accessed.

Taking its own initiative, offline retail major Arvind, which has dozens of popular brands of clothing may allow top ecommerce platforms like Flipkart, Myntra, Amazon India, Paytm Mall, and TataCliQ to have access to its brand stores. Leading brands marketed by Arvind like Arrow and Nautica will also be brought into this ambit.

There are many advantages in this O2O model of which the cost aspect was highlighted above. Experts point out that fashion being a product line with low shelf life, the offline stores tend to stock the latest designs and models whereas it is estimated that over 90% of the fashion clothing displayed online could be outdated, purely from the fashion point of view. The only main challenge could be matching of the inventories and an item ordered online should be available in the store nearest to the customer; otherwise the whole purpose could be defeated. Here is where technology can play a huge role.

As mentioned, some of these models are already working in developed markets like the US and the learnings from there could be used here effectively.

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