RedSeer, Shadowfax launches benchmark for e-commerce delivery

March 18, 2021: The integrated 3PL logistics company Shadowfax and the management consulting firm Redseer today announced the launch of the Delivery Delight Index to enable a deeper understanding of customer behaviour in online retail and preferences and help the brands better serve their customers.

Abhishek Bansal, CEO, and founder, Shadowfax said, “The Index outlines interesting facts about the change in consumer behaviour. Delivery Delight Index will also help brands and platforms understand the satisfaction levels of their end customers across key parameters like the speed of delivery and delivery experience.

“Some of the traditional/retail and digitally native brands who have partnered with 3PL companies are leading in better delivery experiences. This reveals that the industry needs an agile supply chain management and warehousing solutions of 3PL players to improve on their delivery experience score leading to better revenue per customer,” he said.

“I have said this in the past and continue to foresee that five years down the line, e-commerce will evolve into maximum two-day deliveries. While discounts on products are no longer a key driver for consumers to shop online, speed of delivery, safety and hygiene have become imperative in the past few months. Third-party logistics will emerge as an important driver for bringing consumer delight to the brands offering safer, faster deliveries,” he added.

Key frontrunners of the Delivery Delight Index
E-tailing Marketplaces- 1mg, Amazon and Pharmeasy

Hyperlocal Marketplaces- Amazon Pantry, Bigbasket, Dunzo, Flipkart Supermart, Grofers, Swiggy and Zomato

Traditional Brands/Retailer- Decathlon, D’Mart

Digitally Native Brands- Mi, Zivame

Rise of Indian e-commerce
Online retail in India has grown more than 3x in the last 4 years to reach $38 billion in CY20 and is further expected to grow 5x in the next 5 years to become $140 billion market by CY25. This growth of online retail will lead to an increase in penetration from 5 percent of overall retail at present to 11 percent of the retail market by CY25.

As online retail and other related sectors have evolved over the years, it has also brought a dynamic shift in consumer preference and expectation from the online channel. Going back 3-4 years, discount, offers and product assortment were key factors driving customer decision to purchase from the online channel, however, with the development of the ecosystem and digital maturity, the preference of online shoppers have evolved, and they are seeking convenience related parameters such as faster delivery, safety & hygienic experience moreover discounts.

Besides this, the development of the ecosystem has led to the emergence of digitally native brands and Covid have further accelerated the digital journey of traditional brands and retailers. These emerging platforms have better control over their technology and product which helps them to onboard a customer, however, owing to the smaller scale, there is a definite need for partnerships with third-party logistics platforms for last-mile fulfilment and with the emergence of delivery as a key factor for driving customer satisfaction, it is imperative for these brands/platforms to provide best of the class delivery experience to drive the overall customer satisfaction.

Delivery Delight Index
Delivery Delight Index has been developed after ~9,000 consumer surveys covering 34 players across four types of platforms i.e., E-tailing Marketplaces, Hyperlocal Marketplaces, Digitally Native Brands and Traditional Brands/Retailers.

Delivery Delight Index measures the satisfaction of end customers for various players across two key delivery parameters i.e.,

1. ‘Speed of Delivery’ and
2. ‘Delivery Experience’

Delivery experience is further measured on 7 key delivery-related metrics across various legs of delivery including

1. Pre-delivery,
2. during-delivery,
3. Post-delivery experience

Anil Kumar, founder, and CEO of RedSeer Consulting said, “The DDI report provides insight into the consumer psyche and will help e-commerce and traditional brands take necessary steps to improve their delivery NPS. This is the first time that such a comprehensive study has been undertaken in the e-commerce sector to understand where do various brands and platforms stand in the overall delivery experience.

Logistics has been one of the key pillars for the success of e-commerce in India. The study will help the ecosystem get a more nuanced understanding when it comes to the consumer experience on various delivery parameters. The report clearly shows that third-party logistics players are able to provide similar and in some cases even better delivery experience than captive players.”

Key Results
● Traditional brands/retailers platform and Digitally Native brands are able to provide a similar or better delivery experience compared to players with a high captive share of logistics on the back of their partnerships with 3PL players
● In the initial years of E-tailing when the ecosystem for logistics was developing, players focussed on developing an in-house logistics arm to provide the best in class delivery experience to the customers. However, with the entry of 3PL players dedicated to eCommerce logistics, there is ‘Democratization of Delivery’ and there are success stories of players providing a better delivery experience by leveraging 3PL partnerships.
● With the increase in customer base from Tier 2+ cities, it is important for emerging brands/platforms to partner with 3PL payers to increase their reach. At the same time, brands/platforms need to partner with 3PL players for warehousing as well to enable faster order fulfilment leading to improvement in delivery experience

Rationale for selecting 34 players
These 34 players together contribute to 90%+ GMV for the e-Tailing and Hyperlocal market. Also, within the E-tailing Marketplace, we have selected 12 players contributing to 95%+ GMV for the segment and within Hyperlocal Marketplace, we have selected 8 players which also contributes to 95 percent+ GMV for the segment. Within the overall eTailing and Hyperlocal market, these marketplaces contribute to 95 percent of the market while DNB platform and Traditional brand/ retailer contribute to the remaining 5% of the eTailing and Hyperlocal market.

However, since DNB platform and Traditional Brand/Retailer platforms is emerging segment, so we have selected key players across verticals to understand their performance in terms of delivery experience to end customers and benchmarking them with the large players provides a better sense on the positioning of players within these segments vis-a-vis large horizontal and hyperlocal players.