How does a small eCommerce business handle logistics?


We recently visited the office of (an upcoming eCommerce portal based out of Gurgaon and backed by India Quotient) and learnt a lot about how a warehouse works for a small eCommerce store doing around 100 deliveries a day. Here, we asked them to tell us about how they handle their logistics. 

Many people call and ask us, who is your logistics partner? At DogSpot or at any eCommerce portal the answer will be 5-6 partners. The next obvious question is, Why So Many?

The answer is that some logistics partners are very good on reach and coverage but will be high on cost. Others will be good on both but very poor on technical capabilities and service levels. This means that you will not be able to rely upon only one partner and will need a few contracts to sign up.

Selection of logistics partner will depend upon following points:

  1. Reach: Serviceable PIN Codes
  2. Service Type: Surface, COD, Airway
  3. Service levels: Delivery SLAs
  4. Pricing: Per Half Kg
  5. Area Expertise
  6. Technical Capabilities

DogSpot has a system for selecting courier partner dispatching orders. Here is how we do it:

Step 1- PIN Code Check:

We look up shipping address PIN code with the list of PIN codes provided by our courier partners and we get a list of partners servicing the PIN code area. If no one is servicing the said PIN code, we route the packet through Indian Postal Services.

Step 2- Rate Matrix Check:

In this step our system allocates price of the logistics partners based on weight of the packet and the area. The most economic courier partner is chosen. Different logistics company have different pricing slabs per half a Kg weight and it varies with city and regions. If you make a table it will look like a matrix. Something like this:

Exception 1 (by Region): There are some regions in East India (like West Bengal, Assam, Mizoram, Manipur, Nagaland etc) where we need to select non-economic courier partner, since other courier partners fail in getting orders delivered in time.

Exception 2 (by Weight): There are also some regions like (Delhi, Haryana, Punjab, Andhra Pradesh, Tamil Nadu, Kerala etc) where we can send heavy orders by surface mode which is more economical as compared with the Air mode.

Exception 3 (by Reputation): Poor service provider is not selected

Step 3- Feed the System back: All logistics partners are rated on basis of achieving the SLAs. We feed it back as reputation score. Reputation score works on two parameters

1) we check on regular basis if the shipments are getting delivered on defined SLAs or not

2) Customer feedback

Step 4- Automated alerts:

Shipment which are not delivered and they are out of defined SLAs are listed in a report and emailed to concerned executives to follow up manually with logistics partners.

This was a primer to how an eCommerce company chooses its logistic partners. How do you do it? If there are any other questions, do drop them in the comments...

About the author:

Rana Atheya, co-founder, He can be reached out @rana_vr1


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