Indian online retailers push for stricter Service Level Agreements with their logistics partners


June 18, 2014: Indian online retail market which has been witnessing a phenomenal growth in the recent years has been grappling with many issues like FDI, increased level of competition etc. But one of the major challenges plaguing this industry is heightened customer expectations. The customers going for online purchase are becoming highly demanding and vocal and the online retail companies are trying to tackle this issue diligently. As poor logistics capabilities of delivery partners become a matter of concern for players like Flipkart and Snapdeal, e-tailers are pushing for stricter Service Level Agreements with their logistic partners.

The service partners and online retailers are now virtually engaged in a tug of war with both sides taking different positions. As the customer expectations go up and the use of social media is increasing to vent out their anger if any towards the service provider, the online retailers are trying to work with their existing service partners or are changing their partners. According to reports players like Flipkart and Myntra are taking away business from courier companies if they don’t meet the parameters. They are looking for alternatives till the service experience is fixed. Snapdeal is said to pushing logistics companies to take liability of the delivery. The company has started imposing penalty on shipments which are delivered late and damaged or not returned on time. They are asking the logistics firms to assume higher responsibility for the products during transit.

Myntra is following a different process and post its acquisition by Flipkart they have put a framework in deciding courier firms. Some companies are going for tougher Service Level Agreements (SLA) and they are asking logistics companies and courier companies to improve their benchmark and pursuing a system of rewards and penalties. With the increase in distribution cost and margins coming down it is but natural that e-tailers would take more tough stands in the days to come.



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