New Fulfilment Centres To Bolster E-commerce Delivery & Sales

CX Insights
Aug 8, 2017 · 3 min read

E-commerce giant Amazon continues to aggressively expand its operations in the country with the addition of seven new warehouses, a move that will provide employment to about 4,000 people.

#DigitalErra Thought Corner

The US-based company, which has committed an investment of $5 billion in the Indian market, will have 41 warehouses or Fulfilment Centres (FCs) by the end of June this year. Last month, Amazon had said it would open seven new warehouses to boost sales of high-priced products such as televisions, refrigerators and furniture.

“This (new FCs) will double our storage capacity this year as compared to last year. We continue to invest in strengthening our infrastructure to match our pace of business expansion in India,” said Amazon India Customer Fulfilment Vice President Akhil Saxena.

Saxena said the new centres will create about 4,000 new jobs, both temporary and permanent.

About Fulfilment Centres (FCs)

FCs are warehouses where sellers can stock their inventory. They can save money by replacing their upfront capital expense with low variable cost and pay only for the storage space they use and the orders Amazon fulfils.

Saxena adds, “We are seeing really strong growth here. We want to ensure that Indian customers can buy anything, anytime from anywhere in the country. With the additional capacity, we will serve more sellers better.”

Amazon.in has seen shipment of units grow almost 85 per cent in the first quarter of 2017 and continues to rapidly expand to tier II and III cities. Apart from the greenfield FCs, Amazon.in is also expanding capacity of its FCs in Ahmedabad and Delhi to support increased customer and seller demand.

“These FCs will help us deliver faster and enable thousands of small and medium businesses to fulfil their orders in a cost-efficient manner,” Saxena said.

FCs Boost Delivery in Furniture, Grocery and Consumer Electronics Segment

The biggest problem in furniture category is efficiency and a quick supply chain. Unlike other categories, it is not a single-piece category where it is highly unorganized. Also, grocery is a tough segment to crack due to its perishable nature of items. Building and managing the entire supply chain is a challenge for any etailer. While in electronics category, a volatile supply and demand plus a shorter product lifecycle requires a supply chain capability that is lean and agile.

Flipkart is betting on a better browsing and delivery experience to shift offline furniture purchases to online. It is looking into multi-part shipments where a FC or inventory transfer is used to ship items from one warehouse to another.

Besides, both Flipkart and Amazon India have announced significant investments into building supply chain, delivery and installation capabilities for selling large appliances online. While Flipkart has announced a network of 10 delivery centres spread over 6 lakh square feet, Amazon India has invested in setting up nine fulfilment centres of matching capacity across nine states to ship large appliances and furniture.

Conclusion

With the rise of e-commerce, consumer preferences have grown increasingly important where last-mile services act as a key differentiator. In fact, the variety of delivery options and the perceived quality of the delivery service are major decision-making criteria for online customers and hence directly affect e-commerce players’ success in the marketplace. With this in mind, vendors are working hard to offer the best customer experience possible, especially by improving delivery times.

Amazon, is locked in an intense battle with local rival, Flipkart and the competition is set to intensify in the near future with Flipkart recently raising funds to the tune of $1.4 billion from Tencent, Microsoft and ebay.

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