SHOPCLUES: TURNLNG LOGISTICS INTO A COMPETITIVE ADVANTAGE ShopClues has developed a marketplace for the masses by building a technology platform that connects Tier 2 and Tier 3 customers [households with income between $6,000 and $15,0001 residing in Tier 2 and Tier 3 cities] with regional/local brands. In Marth 2016, Ranjit Mayne, senior director of logistics and fulfilment at Sholk'lues.com (Shop Clues), a leading online marketplace headquartered in Gurgaon, India was reflecting on the company's positive turnaround in logistics strategy. Until 2014, the company had been dependent on-air transport to deliver shipments, which had limited it to Tier 1, Tier 2, and a few Tier 3 cities (covering 8,000 postal index numbers or PIN codes). It was entirely reliant on die few national courier services such as Blue Dart Express limited, Ecom private limited, and 1.11 T1
SHOPCLUES: TURNLNG LOGISTICS INTO A COMPETITIVE ADVANTAGE ShopClues has developed a marketplace for the masses by building a technology platform that connects Tier 2 and Tier 3 customers [households with income between $6,000 and $15,0001 residing in Tier 2 and Tier 3 cities] with regional/local brands. In Marth 2016, Ranjit Mayne, senior director of logistics and fulfilment at Sholk'lues.com (Shop Clues), a leading online marketplace headquartered in Gurgaon, India was reflecting on the company's positive turnaround in logistics strategy. Until 2014, the company had been dependent on-air transport to deliver shipments, which had limited it to Tier 1, Tier 2, and a few Tier 3 cities (covering 8,000 postal index numbers or PIN codes). It was entirely reliant on die few national courier services such as Blue Dart Express limited, Ecom private limited, and 1.11 T1
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![Case Study
SHOPCLUES: TURNLNG LOGISTICS INTO A COMPETITIVE ADVANTAGE
ShopClues has developed a marketplace for the masses by building a technology platform that
connects Tier 2 and Tier 3 customers [households with income between $6,000 and $15,0001
residing in Tier 2 and Tier 3 cities] with regional/local brands.
In Marth 2016, Ranjit Mayne, senior director of logistics and fulfilment at Sholk'lues.com
(Shop Clues), a leading online marketplace headquartered in Gurgaon, India was reflecting on
the company's positive turnaround in logistics strategy. Until 2014, the company had been
dependent on-air transport to deliver shipments, which had limited it to Tier 1, Tier 2, and a
few Tier 3 cities (covering 8,000 postal index numbers or PIN codes). It was entirely reliant on
die few national courier services such as Blue Dart Express limited, Ecom private limited, and
Gati Ltd for deliveries. These services had high logistics costs per unit and were not able to
reach customers in tier 3 and 4 cities, which left customers unable to place orders and
dissatisfied.
To meet delivery service-level agreements (SLAs), expand its reach, and reduce delivery costs,
ShopClues had shifted to a logistics outsourcing strategy, which involved using a combination
of national and regional partners. To further optimize logistics costs, the company shifted from
an air mode to an express surface mode of transportation. During its mega Diwali sale In
November 2015, 70 per cent of orders were delivered by third-party logistics (3PL) partners
through express surface delivery covering 19,000 PIN codes. This increased to 95 per cent
during the 2016 Diwali sale. By the end of 2016, ShopClues was delivering over two million
orders per month across 30,000 PIN codes in the country, using a network of 37 3PL partners
(see Exhibit 1). 'Our network of logistics partners delivers to nearly 30,000 destinations across
India, which is the largest for any e-commerce site in the country," Mayne noted.
In February 2016, ShopClues became the fourth entrant in the country's "unicorn club” of e-
commerce marketplaces (after Flipkart, Snapdeal, and Paytm) after it successfully secured
funds from investors, including Singapore's sovereign wealth fund, GIC Private Limited. The
company was targeting to be profitable and to file an initial public offering (IPO) of its shares
on the Nasdaq stock exchange by the first financial quarter of 2018. To achieve the goal to be
the first profitable e-commerce company in the country, ShopClues's logistics and delivery
functions had a crucial role to play. As head of the logistics function at ShopClues, Mayne had
some tough questions to answer: How would the logistics strategy support the company's
growth strategy? How could It meet evolving expectations of customers from its online
marketplace? What would be the merits and demerits of a 3PL strategy? How could ShopClues
leverage technology to optimise logistics services?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F626a464d-c752-480a-8d85-f6950a86c0e3%2F57a558f1-26de-4e81-8b02-9f1f751f803e%2Fi97gp59_processed.png&w=3840&q=75)
Transcribed Image Text:Case Study
SHOPCLUES: TURNLNG LOGISTICS INTO A COMPETITIVE ADVANTAGE
ShopClues has developed a marketplace for the masses by building a technology platform that
connects Tier 2 and Tier 3 customers [households with income between $6,000 and $15,0001
residing in Tier 2 and Tier 3 cities] with regional/local brands.
In Marth 2016, Ranjit Mayne, senior director of logistics and fulfilment at Sholk'lues.com
(Shop Clues), a leading online marketplace headquartered in Gurgaon, India was reflecting on
the company's positive turnaround in logistics strategy. Until 2014, the company had been
dependent on-air transport to deliver shipments, which had limited it to Tier 1, Tier 2, and a
few Tier 3 cities (covering 8,000 postal index numbers or PIN codes). It was entirely reliant on
die few national courier services such as Blue Dart Express limited, Ecom private limited, and
Gati Ltd for deliveries. These services had high logistics costs per unit and were not able to
reach customers in tier 3 and 4 cities, which left customers unable to place orders and
dissatisfied.
To meet delivery service-level agreements (SLAs), expand its reach, and reduce delivery costs,
ShopClues had shifted to a logistics outsourcing strategy, which involved using a combination
of national and regional partners. To further optimize logistics costs, the company shifted from
an air mode to an express surface mode of transportation. During its mega Diwali sale In
November 2015, 70 per cent of orders were delivered by third-party logistics (3PL) partners
through express surface delivery covering 19,000 PIN codes. This increased to 95 per cent
during the 2016 Diwali sale. By the end of 2016, ShopClues was delivering over two million
orders per month across 30,000 PIN codes in the country, using a network of 37 3PL partners
(see Exhibit 1). 'Our network of logistics partners delivers to nearly 30,000 destinations across
India, which is the largest for any e-commerce site in the country," Mayne noted.
In February 2016, ShopClues became the fourth entrant in the country's "unicorn club” of e-
commerce marketplaces (after Flipkart, Snapdeal, and Paytm) after it successfully secured
funds from investors, including Singapore's sovereign wealth fund, GIC Private Limited. The
company was targeting to be profitable and to file an initial public offering (IPO) of its shares
on the Nasdaq stock exchange by the first financial quarter of 2018. To achieve the goal to be
the first profitable e-commerce company in the country, ShopClues's logistics and delivery
functions had a crucial role to play. As head of the logistics function at ShopClues, Mayne had
some tough questions to answer: How would the logistics strategy support the company's
growth strategy? How could It meet evolving expectations of customers from its online
marketplace? What would be the merits and demerits of a 3PL strategy? How could ShopClues
leverage technology to optimise logistics services?
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VIEWStep 3: Explain Meeting Evolving Customer Expectations: Customer expectations and demand continue to evolve,
VIEWStep 4: Explain Merits and Demerits of 3PL Strategy: There are several advantages of third-party logistics (
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