Taking a leaf out of Amazon’s playbook, Jabong, the rocket Internet backed e-commerce portal launched third party logistics services – Ja VAS a few days ago.
The company has already signed deals with more than 10 e-tailers including DoneByNone, YouShine, YepMe and several others to handle their logistics.
“We currently cover more than 1600 pin codes and plan to increase this number,” Praveen Sinha, Managing Director and Co-founder of Jabong told NBW.
The fact that traditional logistics players have trouble in fulfilling the increasing demand has led to the rise of many last mile delivery startups such as chhotu.in and Delhivery. Amazon, the world’s largest online retailer is also expected to enter India in 2013.
Sinha says that e-commerce players find it difficult to work with existing logisitcs players because of slow cash-remittance. High return rates and slow pick up from customers are some of the other concerns, he added.
Logistics is one of the biggest concerns of online retailers as most of existing 3rd party logistics service providers weren’t originally designed for e-commerce. Shipping to all parts of the country can be quite daunting for small etailers and they usually work with multiple partners.
Ja VAS also includes warehousing services, end-mile delivery, reverse logistics, ERP nad IT consultancy for merchants. Presently, the service is in 40 cities and claims to have 70%-80% of the serviceable area in its network, which is close to serviceable area offered by big logistics players using their own network.
“We have developed the capability to handle the outbound logistics from multiple cities like Delhi, Mumbai and Bangalore,” said Sinha who pointed out that the service will be cost competitive once etailer considers the total cost of delivery, which would include cost of returns, cost of working capital and cost incurred to mitigate inconsistent and below par service levels of competition.
Earlier in February 2012, Amazon had got government approval to set up its logistics service in India and the etailers full fledged entry in widely anticipated in 2013. In the US, Amazon offers its fulfillment services to 3rd party retailers across the country. This is a large part of the online retailing giants business.