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Warehousing: The backbone of the e-commerce business


The warehouse industry in India has come a long way from godowns and mismanaged empty spaces to become the backbone of the growing e-commerce industry in India. Going by current industry estimates, the warehouse space in India will grow from the current 909.5 million sq. ft. to approximately 1,439 million sq. ft. by the end of 2019.

Warehousing: The backbone of the e-commerce business

A report by property consultant JLL India titled ‘India’s Warehousing Sector Review’ and released in March 2018 stated that the warehousing sector will attract investments of about Rs 43,000 crore and create 2 lakh job opportunities in the next three years, driven by GST implementation and growth of the e-commerce sector. In its report, JLL estimated that the amount will be invested in creating warehousing facilities across India from 2018-2020. Warehousing stock is expected to rise to 247 million sq. ft. by 2020 from 140 million sq. ft. in 2017.

Warehousing space in India will increase by 112 percent by end of 2021, said JLL in its report.

JLL said that the overall growth in e-commerce and a shortening turnaround time for delivery has necessitated a sharp growth in warehousing in the country.

Importance of Warehousing For E-Retailers

Despite a website with an excellent interface, amazing marketing strategies and great products, any e-commerce player can lose a customer if it fails to ensure its customer a smooth delivery. Due to this, warehouses have become the backbone all operating e-commerce businesses since they ensure delivering customer orders in perfect condition, within a given time frame.

“Making sure all products are checked properly in terms of quality and functioning and are further packed safely, so that they reach the customer in proper condition in a timely manner is the warehouse’s responsibility,” says Amtosh Singh, Co-Founder, PropShop24.

“Our warehouse has allowed us to expand categories, ship quicker and in a more organised manner, reduce shipping timelines and have better processes to check each product and ensure customers receive what they expected,” he adds.

A warehouse is like a central processing unit for any e-commerce or a retail player. From the stringent QC checks to maintaining the inward and dispatch of product, it helps to enhance the customer experience when they receive the product. The warehouse is able to manage the inventory better than the JIT models (Just In Time) which a few retailers still follow.

“A warehouse helps e-commerce players meet customer expectations by shipping products at a faster pace and enables them to have a better control over the quality of products,” says Rajinder Mattoo, Head – Sales & Business Development, Vajor.

“As inventory is available in advance, they are able to maintain the quality and are in a better position to understand customer requirements in terms of style required and quality of product. The chances of error goes to a very minuscule number as they dispatch every product to consumers after proper QC,” he further states.

A warehouse also makes sure that products consumers have ordered are available to them, making it an important part of brand success since the overall success of a brand lies in customer satisfaction.

Technology – Ensuring Smooth Functioning

The job of the warehouse is not done once the package leaves the door. It is completed once the package has been delivered to the customer within the committed time frame. Technology is acting as an enabler to ensure smooth functioning of the warehouse by from the time products reach the warehouse till the time they are delivered. It ensures smooth functioning and helps in eliminating errors, and this the reason why e-commerce players are bullish on investing in technology at their warehouses.

“We have an order processing and inventory management software that takes care of most of the processes related to the shipping of orders. In addition, we have a lot of processes to track products like delivery timeline, returns, damages, etc.,” says Singh.

“We have deployed ‘Warehouse Management System’ technology that helps manage inventory better in terms of season-based inventory maintenance, controlled ageing, maintained quality and faster fulfilment,” says Mattoo.

Vajor’s warehouse, spans across 1,600 sq. ft. built-up space, is handled by a team of 12 people. It handles 500 shipments in a day and inventory of over 10,000 at any point of time. About 1,000 pieces are received at their warehouse each day.

“The better and transparent view of what is available in the inventory in the warehouse is what is helping to transform our brand for future challenges. This has put us in a better position to understand the customer in terms of demand and quality of products,” says Mattoo.

Lenskart’s state-of-the-art facility based out of Gurugram is designed with the vision to revolutionise the eyewear industry in a true sense with 100 percent accuracy for all spectacles and glasses that are sold. The facility imbibes latest technological global concepts of eyewear manufacturing making it one of the best in India. The fully robotic manufacturing facility supported by highly specialised and latest technology like MEI further strengthens the manufacturing process.

“Backed by a team of technology specialists, we are using a number of innovative technologies which includes Augmented Reality to add to the convenience of customers. We use cloud-based infrastructure to make sure that our all 500+ stores and online is synced through a common inventory which further helps us in determining the inventory in real-time. We also use six-sigma technique which means each product at Lenskart is uniquely bar-coded ensuring that consumer gets the right product within a given time,” says Amit Chaudhary, Co-founder, Lenskart.

Growing Demand of Warehouses

Many e-commerce players are now looking at vertically integrating and handling all of the processes internally to have a complete control over the inventory and maximize margins – and warehousing is one of those processes. Quick delivery is the essence of success for any business and that is why the brands are opening multiple warehouses around the country.

Grofers – which competes with the likes of BigBasket as well as grocery verticals of e-commerce majors such as Flipkart and Amazon.in – is planning to continue to build out its warehousing infrastructure along with supply chain and private label product offerings.

Similarly, online restaurant guide and food ordering firm Zomato will invest around Rs 56 crore to set up 20 more warehouses across the country by the end of 2020 under its B2B platform, Hyperpure.

The warehouses would be set up in Delhi, Bengaluru, Mumbai, Pune, Chennai, Hyderabad, Kolkata, Jaipur, Ahmedabad, Chandigarh, Nagpur, Lucknow, Vadodara, Coimbatore, Kochi, Agra, Goa and Surat. It is also planning to launch its warehouses in international markets.

The company currently has two warehouses — one each in Bengaluru and Delhi — with a combined capacity of 9,000 metric ton (MT) per month.

Last year, Amazon set up five more warehouses in cities like Bengaluru, Gurugram, Vijaywada, Kolkata and Mumbai, as the global e-tailing giant looks to strengthen its delivery capabilities amid intense competition from rivals like Flipkart.

With the addition of these new facilities, Amazon has 67 fulfilment centres (FCs) in 13 states, with a total storage capacity of over 20 million cubic feet.

“Providing convenience to the customers is the mantra of success for e-commerce players today. Gen Next customers expect their orders to be delivered at the earliest possible. To match increasing consumer demands, brands prefer to build multiple warehouses near their consumers,” Chaudhary states.

Lenskart has a 200,000 sq. ft. warehouse-cum-manufacturing facility in Gurugram which employees 600 people. It houses approximately 16,000 SKUs. The brand is planning to open more satellite warehouses in cities like Bengaluru, Hyderabad, Kolkata and Mumbai.

“The number of e-commerce players are increasing with the increasing demand of customers disposable income, and owing to these two reasons, there has been a surge in demand of warehouses,” concludes Singh.