This article first appeared as a Linkedin article I wrote on October 11th 2016.
When Flipkart launched it's first TVC pitching itself as an online book store, I was very excited. I immediately went online, ordered a book and it was absolutely amazing to see the book get delivered to my house. The last few years seems to have gone in a haze as e-commerce players(with lots of money being pumped in) appeared with their own full-fledged operational setups! Next day delivery has become a norm and the customer today is completely spoilt for choice. The virtue of patience is lost. S/he orders the same product from 3 different websites and whichever company delivers first takes home the cash. This ended up putting a lot of pressure on the E-com players and they had no choice except doing whatever it took to get to the customer first. This meant shipping costs went up through the roof which are not getting transferred to the customer making further dents in the P/L. Real time information visibility has become a market differentiator today. By the looks of it this vicious circle is not going to end till these companies run out of VCs to pump in money.
While this was happening, the Express industry observed the change in their customer's expectations as well. Be it B2B, B2C or 2C, everyone started expecting a faster TAT(Turn Around Time) "When I order something from XYZ.com it reaches me in 1 day that too with free shipping. Why do you charge a premium for next day delivery?" is a question I have faced from a lot of B2B as well as 2C customers. I understood retail(2C) customers asking this question but I was quite puzzled as to why B2B customers were asking this. It struck me a few days later that everyone was buying products online and they were transferring their expectations and lack of patience on to the Express industry.
Now this is where it gets interesting...so far Express had cashed in on the E-commerce boom and went about setting up the infra to handle E-commerce shipments as that is clearly the future. In the meantime, the logistics wings of E-commerce companies have started targeting traditional Express customers. They have to generate a positive cash flow and Express customers will help them get there. They have already invested a lot of money and built a world class infrastructure, they have built a reputation for perfect service and have real time information transfer systems in place. It's not difficult at all for them to breach the Express market and the customers will be more than happy to receive a higher performance than what they are currently getting.
For the Express industry to survive, it has no option but to start rising to the unreasonable expectations that the market has set. The Express industry will really need to up their game and they need to do it today. Express players aren't just competing against other Express players anymore, E-commerce players have become much bigger threats. How this fight will pan out is something that has to be seen. All I can say is that exciting times are ahead!
Shomik Roy is a second year MBA student at Schulich School of Business, Toronto specialising in marketing. Shomik’s area of expertise lies in marketing strategy and scaling up sales and operations networks.