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The Economic Times
Three years ago, Manjunath Ramappa was attending to customers at one of India's largest retail chains when he noticed the winds of change blowing around him. As big discounts lured shoppers online, the ambitious salesman followed suit, signing up as a warehouse manager at fashion portal Zivame.
Behind the glitzy online catalogues of clothes, perfumes and apparel that are drawing Indians in droves to ecommerce portals, there is an organised network anchored by technology and manned by people like Ramappa, who are tasked with ensuring that the wheels of Indian online retail run smoothly. "I think I made the right career move; ecommerce is growing like anything," says the 32-year-old, who leads a team of over 40 people to make sure there is no slip-up as goods are picked, packed and shipped with clockwork precision in the cavernous warehouse in Bengaluru.
In the next five years, as ecommerce explodes in India with sales expected to reach $43 billion (Rs 2.6 lakh crore), advanced warehouses could mean the difference between success and failure for online retailers.
At Myntra, the fashion portal acquired by market leader Flipkart in May 2014, the current capacity of over five lakh square feet spread across five warehouses is expected to double soon. Zivame also expects to increase storage from its current 12,000 square feet.
Beefing up technology and storage is critical for these companies as fashion emerges as the fastestgrowing category in India's booming online retail industry. Myntra expects to sell merchandise worth $1 billion by March next year.
"They (warehouses) are the backbone of the ecommerce industry. If you trace back its history, Amazon did not do very well without the warehouses. Now, that is their strength," said Partha Priya Datta, associate professor of operations management at IIM Calcutta.
To understand why the operations within a brickand-mortar warehouse are critical to the success of online retail, ET took a sneak peek inside the warehouses of two fashion portals - Myntra and Zivame. "The warehouses are all virtually mapped out," said Ashutosh Lawania, cofounder of Myntra, who oversees the supply chain at the fashion portal, which uses technology built inhouse to manage operations from customer-care to inventory and payments.
At the front end, customer care executives can trace the journey of an item, while merchants can log in to see how quickly their stock is moving from the portal. On the floor of the warehouse it is software that dictates where items should be dropped and what path an employee should take to navigate the maze.As ecommerce players lure customers with deep discounts and sameday deliveries, faster processes become necessary. And these giant automated warehouses give them the horsepower to deliver on promises.
"It's important because you're selling more products in a lesser amount of time. The fixed cost gets spread over more items, so the cost per unit reduces," said Datta, who estimates that Indian portals now manage about 30 large warehouses.
Zivame's warehouse in central Bangalore occupies two floors spanning 12,000 square feet each and will be tripling in size soon. While these facilities appear enormous, they would pale in comparison to Amazon, America's largest online retailer, which manages over 80 warehouses, some large enough to hold more than 28 football stadiums. Typically, warehouses in the US are located in the suburbs and close to airports to help companies take advantage of lower land and manpower costs. Using technology to help manage day-to-day operations within a warehouse is key to success, according to Datta.
"In the apparel industry, gauging stocks is tricky and software helps them decide what different people want to wear and which trend will disappear tomorrow," he said.
But there is only so much that software can do. It takes human ingenuity to find the right mix of technology and people to make sure that processes are efficient and costs are controlled.
For instance, when a Myntra customer places an order, say a pair of jeans, it makes its way out of the warehouse in less than four hours. At Zivame, it takes less than two hours.
"A year ago, orders would get delayed; the warehouse space was not well utilised. We have come a long way from that," said Venkatesh SS, vice-president of operations at Zivame.
At Myntra, which says it handles one lakh shipments every day, the 'pickers' who collect items are given a device much like the card-swiping machine carried by delivery boys. The device shows what item should be picked up from which grid. The workers scan, pick and deposit items in the grid, irrespective of whether all items belong to one single order or not.
Myntra's logistics are handled by Vector ecommerce. At Zivame, because there are relatively fewer orders (about 2,500 a day), each picker handles a set of orders without a handheld device. But as more orders come in, Zivame too will have to graduate to handheld devices to save paper and time.
Globally, Amazon is known to have timers set within the handheld device, so the picker finishes the task within the time limit. It's a race against time and orders. Last holiday season, Amazon gave a peek into its warehouse where it showed short 16-inch robots criss-crossing the warehouse, helping employees complete multiple orders at once.
"The greater the volumes, the greater is the requirement for automation," said Naman Jain, head of business development at Falcon AutoTech, which sells automation solutions to large ecommerce companies. "Conveyor belts and weighing machines when automated can reduce turnaround time by a fourth," said Jain.
Deep discounts that mark holiday sales are also when workers put in all-nighters at the warehouse. On regular days, they work round the clock in three shifts of nine hours each.
But will we see robots anytime soon?
"Let's see. If things continue to progress like this, we won't have an option. Maybe in the next 5 to 7 years," said Myntra's Lawania.
Quick facts about the ecommerce industry
Indian e-commerce is projected to explode from $10 billion to $43 billion in the next fi ve years, according to Nomura's India Internet Report last year. There are 11 categories, and within them 42 players, that are poised to shape this blazing path.
Fashion and lifestyle is the second largest category in online retail, with a 25% share after electronics. It is the domain of brands and specialists, unlike electronics, which marketplace driven.