Why I think same-day-delivery models of Ebay Now and Flipkart are unsustainable?

Ebay Now and few others in the US have launched same-day-delivery business models.

There have been fanciful launches of services in the past, and a launch is NOT the same as success.

So whether this works or not, the jury is still out.

Here’s a story on the ebay Now model in the US.

And I have seen the Peapods and the Webvans which struggled (not just with same day delivery but with the general business model that they took on) and failed. And I have a sense that these same-day-delivery models are also unlikely to win.

I hear that Flipkart is also gunning to start these in India, and I see challenges in the same.

Why do I say so?

Here are a few reasons:

It cannot be economical. Earlier traditional models of delivery of such kinds, got challenged on economics, and gave up. Bundled, slightly longer delivery schedules to get some economies of scale (rather than deliver your one package, can deliver 4 in your area, once in 3 days?). So don’t know how this current trend can sustain.
It is not scalable. You may end up needing warehouses at various locations, and then a network at each of these.
You’re competing with the local kirana, local vegetable vendor, etc. who will deliver anyway.
You’re spoiling the customer. Most times, he doesn’t need it same day anyway. To get your edge over your competitors, you’ll do this, after a while find it hard to sustain, then drop it. Customers will feel let down. Curse you for withdrawing.
You’ll burn some money for the 6-12 months that you will attempt to do this. Customers are not going to pay a huge premium to get this. So all the local warehousing, and the set up of the network, and absorbing some of the cost to acquire a few fussy customers. Will all go waste. As withdraw it, you will, in time.

Meanwhile, it is an interesting story to get the buzz to happen..for ebay Now there, and soon for Flipkart, here..

July 30, 2013 - Posted by Sanjay Mehta | Business Model, Ecommerce, Retail | business model, delivery, ebay now, eretail, flipkart, logistics, same day

2 Comments »

I think same day delivery is been good for customers but still its a challenge for an ecommerce companies in India. I heard this word few months back when i was looking for gifting a cake and i war searching for same day delivery as well. I land on http://www.infibeam.com cakes gifts section where i ordered a cake and got in around 14 hours as well. I was not that sure about the delivery but still got it at my door step. Still for other products it may not be easy for them but lets hope

Comment by Zoya | September 14, 2013 | Reply
Same day deliveries work only if it becomes local. The best solution for this problem = Local store listing + delivery fleet (can be inhouse or affiliate) + Navigations + delivery automation stack + Live tracking. This equation might turn stochastic due to noise like inventory mishaps, staffing issues and as always unknown. Which is what we are solving at Nagara Technologies. Call 9442169777 for insights or funding 🙂

Comment by Karthik Appadurai | October 23, 2013 | Reply

Inspiration

UPDATED INSPIRATION: Current date: March 9, 2021!

Below is the original note on the inspiration that I had to start this blog, some 12-13 years back. That was when I was tracking some startups and evaluating them. I had not updated this blog much in recent days. And now, the focus would be very different, in any case. At this time, the purpose of my occasional blog post here, would be to discuss and debate a business strategy or an investment idea, for purpose of interaction with other like-minded people.

Hope you find it to be of interest.

The original inspiration from 12-13 years back is as follows:

Attending a Bar Camp, Startup Saturday and the Entrepreneurship Summit, in the last 3 weeks, took me back to 1997-98 days when we were starting up for the first time, with Homeindia.com, along with few other first-generation dot com entrepreneurs in India.

I can see the same energy now, perhaps only magnified by the changes in the economy over these years, the emergence of India as a country to reckon with, the maturity of the ICT businesses, the far larger familiarity of the technologies for students climbing out of their campuses, and of course, the awareness now, about an ecosystem that can encourage entrepreneurship.

There is another change. Me. With 11 years of hands-on Internet experience, there is a larger “intuitive” feel on the industry, there is beyond the romanticism of the business, a better understanding of business realities, of markets, of revenues and results. As one young participant respectfully pointed out, there is the “gray hair” difference.

This has inspired me to start this new blog. To share my 2 cents worth, on new startups that I see coming up. Based only on information that is in the public domain (or shared by the company in public forums), and not based on any private information that entrepreneurs share with me. With an idea to give some new perspectives. Ultimately the business succeeds because of the entrepreneurs and they need to trust their gut. But “outside” views help sometime. And which is what I strive to provide here. With only one goal in mind: to enable the entrepreneur to SUCCEED!!

The Gray Hair Speaketh

Advice that is largely Unsolicited..