When it comes to making fresh investments, entrepreneurs globally are placing their bets on India. One more example in this regard became evident as global operators in couriers, Deutsche Post DHL, or DPDHL, chose Delhi for its pilot project to launch e-commerce in Asia Pacific. Global importance of India with regards to the e-commerce segment can be gauged from the fact that several other cities were also under consideration for this project.
Deutsche Post DHL’s decision couldn’t have come at a better time because India has chosen Delhi to set up the first in a series of 100 smart cities. Moreover, e-retail business is expanding in India in a big way as the middle class professionals increasingly giving preference to online shopping. Flipkart, which started as an online bookselling service, has expanded to virtually all other items of daily use. Global online retail giant, Amazon has set up a dedicated service for Indian consumers. As the online retail enterprises are vying with each other to capture a bigger share in the lucrative and growing consumer pie, the private courier delivering companies such as DPDHL will be in strong demand.
DPDHL plans to make India’s capital city a role model for expanding its services across the South Asian region. The service will be launched in the current quarter. “Our market study shows that in terms of online sales, Delhi is a place ahead of other cities in the region,” said Malcolm Monteiro, CEO DPDHL e-Commerce Asia Pacific.
The Delhi e-commerce service would be subsequently expanded to Mumbai and Bangalore. “We will modify and adopt the Delhi model suitably in other Asian cities,” he said.
The service will be offered through the group’s Indian subsidiary, Blue Dart Express which serves over 34,154 locations in the country.
DPDHL and Blue Dart Express have a strong presence in India, delivering 400 metric tons of material every night from shippers to consumers, or 125 million shipments a year through its 10,000 personnel working across the country.
Through Blue Dart, the company has identified key needs of India’s top online shoppers – male, high-income, young urbanites. The company’s 20-country consumer survey on international distance selling, titled, ‘Shop the World’, has helped provide a deeper understanding of the mindset of those who indulge in sitting-at-home shopping.
Blue Dart’s unrivalled domestic delivery system and network capabilities in India provide the perfect base for piloting the development of region wide e-commerce solutions, its managing director, Anil Khanna said.
“We are working closely with leading brands, physical market place sellers and retailers to help them establish a sustainable footprint in e-commerce. We are investing in the suitable infrastructure, including information technology, to build the right model for our consumers and sellers,” Khanna said.
As such, DPDHL is well positioned to pilot e-commerce in India and generate a business model which can be a template for the rest of Asia Pacific, particularly focusing on Southeast Asia.
Given that most Indian consumers would prefer to pay on delivery of products that were ordered online, delivery persons from DPDHL would collect payment in cash or through a credit or debit card-swipe mechanism, Monteiro said.
DPDHL will encourage our customers to pay through card-swipe mechanism, a more safer and protective method, he said.
“We have a ‘Net Promoter Approach’ by which we are regularly in touch with our consumers and aspire to keep up with their expectations, giving them top priority.”
Worldwide, e-retail is rapidly evolving. Over the next five years, the global e-commerce sector is expected to grow by more than 10 per cent annually with Asia-Pacific leading the way. This region is expected to soon surpass North America and Europe as the biggest online market in the world,” said Frank Appel, Chief Executive Officer of Deutsche Post DHL.
“As the leading logistics company with an unsurpassed global footprint, there’s a huge opportunity for us to become the world’s leading provider of e-commerce logistics and we already have the infrastructure ready in India to pilot our solutions,” he added.
The DPDHL group is further investing in infrastructure and the development of fulfilment centres and multiple delivery and payment options as part of its plan to become the preferred global provider of e-commerce related services including e-fulfilment and e-facilitation.
By 2025, the share of e-commerce in overall volume of trade will be close to 30% in emerging markets and 40% in developed countries, according DPDHL’s report ‘Global E-Tailing 2025’.
All countries across Asia are in different evolutionary stages when it comes to e-commerce. “We need to adapt our service portfolio within the region accordingly”, he said.
India Online
Globally, the demand from the perspective of e-Commerce is far ahead of supply. Indian scenario is the opposite.
“In India, the internet penetration for online purchasing of goods is only about 1 per cent. This means supply has so far exceeded demand,” Monterio stressed. It also implies that as Indian demand increases, there is a huge business opportunity waiting to be tapped.
With 250 million internet users, Indian e-commerce remains underdeveloped and its online shopping was valued at EUR2.3 billion in 2013. This is expected to grow to EUR4.1 billion by 2018, a compounded annual growth rate of 12.3%.
According to the ‘Shop the World’ survey, online purchases in India are limited largely to consumer electronics, fashion and media products with shopping done by smart phones being the norm. The main reasons for online shopping in India are: overcoming geographical restrictions on choice and unlimited shopping hours. On the other hand, the biggest negative for shopping online is the unknown quality of products. E-shoppers in India revealed delivery expectations that were higher than the global average. Despite the country’s size, Indian shoppers expect delivery within 5 days compared with the global average of 6.5 days. Indian consumers also want detailed parcel tracking options and free delivery. The 28.5% average rate of return of goods also scored higher than the global average with poor quality or defects being the foremost reasons for returns.
The survey also identified opportunities for growth in the development of online payment systems – cash on delivery or cards being India’s top payment choice – and in international sales. The majority of Indian e-commerce is domestic with only a third of the online consumers having ordered products from overseas. Purchases from overseas are set to grow with more than half of the online shoppers planning to place an international order in future and the United States is their topmost source of origin.
