High costs, weak logistics challenge ecommerce in small towns


In the current situation when the richly funded hyperlocal endeavors and online grocery stores are progressing rapidly, the popular physical stores are still successful in the tier 2 and tier 3 cities in the country. The e-commerce industry in the country that is worth $18 billion is still facing challenges in the places beyond the tier 1 cities.

This is evident at the Kovai Pazhamudir Nilayam at Rathina Sabapathi Puram in Coimbatore. The store has an assortment of vegetables, fruits and groceries for the shoppers. Almost 1,000 buyers stream into the shop on a daily basis as they find it better than buying produce online.

Irrespective of the advent and growth of e-commerce that has slowed down the business slightly, the store has planned to open 100 stores in South India.

If the customer sentiment is difficult to shift, there are several other problems that have limped the unbridled expansion. The poor connectivity and shaky last mile logistics are shambling the surge in the small towns across the country. The data networks, last mile logistics and cost of reach are everyday challenges while reaching the hinterland, says Suchi Mukherjee, the founder of online fashion discovery portal Limeroad.

Manoj Gupta, the founder of online vendor selling ethnic products Craftsvilla stated that the logistics as well as supply chain are broken. Not all are convinced that a foray into the tier 2 towns and beyond is needed in the future.

Amazon India has a different approach to resolve this as it has come up with its own workarounds. Amazon has established 4,000 Amazon Pickup Points across the country. These will be its own drop-off points that will deliver products to the smaller towns where the addresses are tough to track. The customers can pick their ordered products from such places that are nothing but local electronics shops or kirana stores using the text message from the vendor.

Even Craftsvilla is in plans to extend its business’ reach by entering into a tie-up with India Post. It has also come up with an assisted shopping model in order to push its online business offline.







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