Ankita Rai, Financial Express
New Delhi, 30 August 2016
marketers such as coupon, cashback and deal sites often work as a match
made in heaven for retail/e-commerce firms when the latter take baby
steps into the business world. These sites drive traffic to e-commerce
players on commission basis, similar to the cost of acquiring a new
customer or a sale.
Till last year, affiliate marketers
benefitted a great deal from the e-commerce slugfest as e-tailers doled
out attractive commissions.
But in recent times, something
has changed as e-tailers focus on positive unit economics and relook at
their business models in light of new government norms and investor
pressure. With GMV being considered an ‘old school’ metric now,
e-tailers are rationalising affiliate commissions and looking for
quality customer traffic beyond deal seekers.
Take the case
of Snapdeal. According to industry sources, it has cut down on
commission paid to affiliate marketers by 50-60% for existing customers
from March this year.
For high volume categories like mobile
and tablets, it now pays 1% for the existing customers for upto a
monthly threshold of 2,500 transactions against the flat commission of
2.5% paid in August 2015.
In case of high margin categories
like clothing and accessories, the commission is down to 3% from 12% in
2015 for existing customers for upto a monthly threshold of 2,500
transactions. Snapdeal was unavailable for comment.
which was the darling of affiliate marketers due to its cashback
offers, has also stopped paying commissions for its marketplace this
year, with its focus shifting towards services such as ticketing,
mobile recharges, billing etc.
While Flipkart’s affiliate
commissions have remained the same, more or less in the last one year,
there is a shift in favour of new customers and apps. It pays 1.5%
commission on mobile phones for existing customers while and 2.5 % for
a new customer order.
This figure stands at 3.5% for mobile
apps. For high margin categories like fashion and lifestyle, the
commission for a new customer order in apps is as high as 15%. Flipkart
and Paytm didn’t reply to the emails seeking their comments on
affiliate marketing commissions.
Amazon India, on the other
hand, has a flat structure of advertising rates and pays 4% commission
for electronics. But top selling brands such as Xiaomi Redmi Note 3 or
MotoG4, do not qualify for advertising fees.
e-commerce players are moving away from coupon and cashback affiliates
in favour of price comparison, product review, aggregation and
blogging-based models. “We have discontinued business with cashback and
We want to enable customers to discover and
shop directly on Amazon without the need to come through
intermediaries,” explains Kishore Thota, director, digital marketing,
“While we still work with rebating sites for
enabling discovery of deals and prices, we have stopped any cashbacks
from being passed on to the end customer.”
players have changed the game for cashback-centric affiliate marketers.
“While wallet players may not be traditional affiliate partners, they
have certainly eaten into the affiliate pie,” says an e-commerce
expert. With GMV in the e-commerce space down by 20-25% this year
during the first six months, a similar impact is expected on the
affiliate industry. Does all this spell doom for couponing and cashback
sites and other kinds of affiliate marketers?
Focus on the bottomline
obtained from affiliates may be even more valuable than qualified leads
since affiliate sites already provide some context to the product (for
instance, product comparison websites or lifestyle blogs). However, the
e-commerce business has changed in the last six months.
is not surprising that e-commerce companies are relooking at
affiliates. Most of the traffic coming from affiliates is of bargain
hunters. Therefore, they are rationalising the commission as they are
trying to focus more on quality organic traffic and customer loyalty,”
says Pragya Singh, vice president at retail consulting firm Technopak.
price comparisons, deals and cashbacks were significant contributors in
the initial years, lately e-commerce players are seeing good traction
from individuals with social media accounts and from content sites who
have regular visitors/fans.
For example, the Amazon Associates programme allows individuals to connect with relevant products from articles.
is now working with only five partners in the affiliate space which
include CouponDunia, Komli and vCommission. “Till last year, we were
working with 15 affiliate partners. We now work with few partners who
have better capabilities of buying inventory, provide quality traffic
and are doing better customer segmentation at their end,” says Amit
Chaudhary, co-founder, Lenskart.
]The firm offers up to 20%
commission to the affiliates and, in fact, has increased its commission
over time. “We are capitalising on the situation. We are 90% a private
label entity,” he explains.
With affiliate marketing being
the “cheapest medium after email” investing 10% of overall marketing
spends in it is a no-brainer for Lenskart.
e-commerce players who are at a slightly more mature growth stage,
discounts can’t be the main driver anymore. “Now price is less of
driver,” says Nitin Agarwal, AVP, marketing, ShopClues.
of the traffic coming through cashback and coupon sites is from tier II
and tier III cites. Only those affiliates are doing well overall which
are adding some value beyond deals and discounts.”
The big picture
business environment for affiliate websites is becoming tougher with
time. “With fewer sites to send their traffic to, margins may be
reduced, business thresholds for higher margins may be moved up,
payment thresholds may also go up to reduce administrative effort and
expenses, and the period for expiry of a referral may be shortened,”
says Devangshu Dutta, chief executive, Third Eyesight.
affiliates are upbeat about their business models and see consolidation
in e-commerce space, cutting down of deep discounting and focus on
quality traffic as a boon for the ecosystem.
added cashback as a feature in April this year and believes cashback
and coupon will continue to work well in the space because it’s human
nature to save.
For every commission it earns, the portal
keeps 30% and pays rest as cashback. “The economics of transactions has
to make sense. If a retailer is losing money or has very low margins on
a transaction, it cannot afford to pay us high commissions,” says
Sameer Parwani, founder and CEO, CouponDunia.
discounting norms won’t impact coupon and cashback players. If
retailers reduce discounting, they have more room to pay for our
commissions and the cashback part will see an increase.”
cements his argument saying that once the e-commerce player cuts back
on discounts, the only way for consumers to look for the best offers is
Then there are others like Rohan
Bhargava, co-founder of cashback site CashKaro who say that the
e-commerce focus on profit is good for affiliates. Due to investor
pressure, e-commerce companies may have cut down on affiliate
commissions but this could be short-term.
“In certain cases
we have seen a rise in commission like in Healthkart’s case. Niche
sites are doing well while commission has been steady for players like
Flipkart and Amazon for the last one year,” he says. He further states
that the beauty of cashback is, the discount happens after transaction
and therefore, doesn’t impact GMV. But not everybody agrees with him.
Kumar, founder, FreeKaaMaal.com, says the cashback model is totally
incentive-driven and doesn’t add any value and at the end of the day,
affliates also need to be profitable.
Currently, a large chunk (80-90%) of the revenues earned by cashback sites is going back to the users.
offset this, these companies need to increase the transactions
manifold. But that is not possible anytime soon,” he says. “If you look
into the traffic trend of cashback sites, 90% of the traffic is repeat
users. This is contrary to deal sites where 50% traffic is new users.”
focus on profitability is also forcing affiliates to adopt better
business models. Currently, two models exist: charge on per pay basis
and per customer visit (PCV). The industry is moving towards the latter
as the risk is minimal.
The price comparison and product
discovery platform MySmartPrice attracts 10 million unique consumers on
its platform every month and claims to do three lakh transactions per
month. “Annually close to 660 million unique customers transact on our
site,” says Sulakshan Kumar, co-founder, MySmartPrice. “We help
e-commerce get two to five times increase in daily GMV volumes during
the sale season.”
Industry experts say affiliates will soon
be as big as e-commerce sectors. In developed economies, 15 to 20% of
the sales come from affiliates. In India it is less than 10%. The
affiliate industry in India is less than Rs. 1,000 crore.
the US, online branded apparel stores such as Nike work a lot with
coupon and cashback sites because their margins are good. But
horizontal players prefer price comparison, deal and review sites. This
trend is yet to catch up in India,” Kumar adds.
The new government rules on e-commerce marketplaces and discounting have actually made players go back to the drawing board and relook at their financial models.
“Changes in affiliate commissions are a byproduct of this. Affiliates are part of the e-commerce ecosystem and cannot be seen in isolation,” sums up Anil Talreja, partner, Deloitte.
(Published in Financial Express)
Suneera Tandon, Quartz
New Delhi, 19 August
The Indian defence services could teach the
country’s top private retailers a thing or two about making money.
A chain of 3,900 stores of the Indian defence ministry’s canteen stores department (CSD) earned Rs236 crore ($35 million) in profit in financial year 2014-15, according to a report in the Economic Times on Aug.17, based on a reply to a right to information query.
For the same period, the Kishore Biyani-owned Future Retail, which runs supermarket chains such as Big Bazaar and eZone, reported a profit of Rs153 crore; the corresponding figure for Reliance Retail was Rs159 crore.
The CSD stores typically work on operating margins as low as 1%—this figure can vary anywhere between 8% and 18% for a private retailer. These canteens function on a not-for-profit basis, but their volumes are huge. In 2014-15, their turnover stood at Rs13,709 crore, according to the report, trailing that of Reliance Retail at Rs17,640 crore but ahead of Future Retail’s Rs11,149.87 crore.
A big reason to the CSD stores’ better profitability is lower overhead costs.
“CSD does not have to bear two expenses that are major operational costs for retailers—real estate and advertising,” explains Devangshu Dutta, CEO of Third Eyesight, a New-Delhi based consulting firm. That’s because they are located within easy reach of defence staff, typically inside cantonments and not in commercial locations such as markets or malls.
“Staffing and training costs are lower than private retailers since the management workforce is partially shared with the standing armed forces. CSD also has a focused, sometimes captive, audience which it doesn’t really have to fight for,” Dutta said.
These stores account for a bulk of the turnover of large consumer good companies. In fact, business from these canteens contributes between 5% and 7% of total sales for some of them, according to estimates by the Economic Times.
The country’s largest consumer goods firm
Hindustan Unilever, for example, counts CSD as its biggest customer in
south Asia. The same holds true for liquor major United Spirits.
Why CSD canteens?
CSD canteens were set up in 1948 as stores to ensure “easy access to quality products of daily use, at prices less than the market rates.” Their customers were serving army, navy and air force personnel, besides the retired ones and their families.
The stores have served Indians troops even during wars and natural calamities.
For instance, during the Indo-China war (1962) and the Pakistan incursions (1965), the canteens ensured swift supply of goods to Indian troops, according to the CSD website.
In the 1970s, as the number of stores increased, the defence ministry sanctioned an organized structure to manage them. Today, CSD has nearly 2,400 employees.
These stores reportedly serve some 12 million customers annually with over 4,500 products such as television sets, audio and video systems, refrigerators, soaps, shampoos, liquor, and even cars—all at prices considerably lower than market rates.
In fact, liquor is the highest-selling category and contributes 26% of CSD’s sales, followed by toiletries.
For those serving the country, these canteens are an inseparable part of routine life and brands just cannot miss out on these stores.
(Published in Quartz)
Chitra Narayanan, The Hindu Businessline
Bengaluru, 18 August 2016
When Harry Potter and the Cursed Child
was launched globally, Snapdeal arranged deliveries of the book within
two hours of the order being placed. It could do so thanks to its
predictive demand management system fuelled by big data, and its 69
‘fulfilment’ centres across the country.
In the age of instant gratification, it’s getting harder and harder for companies — especially e-commerce retailers — to meet customer expectations as shoppers want stuff here and now. Drones may help in the future. But today, as Samay Kohli, CEO and co-founder of Grey Orange, a logistics start-up that builds robotic solutions, says, “The only way you can do two-hour deliveries is if you set up automated warehouses which are closer to market.”
Snapdeal’s chief Customer Experience Officer Jayant Sood says the company is focusing on leveraging cutting-edge technologies — from big data and predictive analytics to IoT technologies — to bring previously unexplored operational and business efficiencies at each leg of customer engagement.
He describes how the e-commerce major is now operating closer to customer clusters, reducing last-mile delivery gaps, and has introduced six new one-touch fulfilment centres which combine warehousing, quality control and transportation in one complex.
It has also piloted a plug-and-play model in Delhi-NCR, which, he says, “allows our partners to integrate with our supply chain management system on their own and work towards better resource allocation.” This will be scaled up nationally soon.
Devangshu Dutta, chief executive of retail consultancy Third Eyesight, says that across India, you will still find old-style godowns “where workers clamber over sacks like monkeys” and where no digital inventory is maintained. Yet, you are also seeing highly automated warehouses with intelligent tracking software that tells you exactly where a consignment is, he says.
He feels e-commerce is leading the change. “E-commerce is mostly run on cash on delivery. The faster you can move products through by reducing shipping times and holding times, the quicker you can get your cash,” says Dutta, pointing out that such considerations are driving companies to improve their supply chain.
Another key concern is to reduce fraud. Says Kohli of Grey Orange, “Our focus is to fight inefficiencies in the system, add scale and flexibility to supply chain.”
Remember the time somebody ordered a laptop on Flipkart and got three stones instead? Or when somebody ordered a mobile phone on an e-commerce site and got a Vim bar?
Kohli describes how a lot of fraud happens within the supply chain. He cites, for instance, a case where laptops were being shipped out of a warehouse but were being billed as toys.
“Somebody was going online and ordering toys and these laptops were being shipped out,” says Kohli. The solution: sorters with X-ray machines which can catch these pilferages.
Kohli also talks of how once a warehouse is automated, it allows the e-commerce company to actually create demand and service it instantly. It can also be geared for unpredictability. For instance, a tweet with a picture of red shoes got an apparel company a whopping 160 orders for the pair. In normal circumstances it would not have been able to service the order quickly. But thanks to the demand management software, very quickly the company caught on that something strange was happening.
“They spotted that order gap time was reducing — earlier it was a week, now orders were coming in every five minutes. By the time the fourth order came up, the message had been communicated and, at the warehouse, robots moved the rack with red shoes right up front,” says Kohli.
“Through automation we can take care of all the spikes — both predictable and unpredictable,” says Kohli.
It’s not just e-commerce companies. FMCG behemoth ITC, with brands such as Sunfeast, Bingo and Yippee noodles, has also done formidable work on its distribution chain, putting in place an IT backbone to power it. In terms of scale, ITC has about 50 distributors, 2,800 stockists, and 8,000-plus salesforce on ground and reaches out to two million retailers directly.
The IT backbone created by ITC’s Infotech division links the entire chain from head office down to every single outlet.
Advanced back-end individualised analytics capture outlet-level sales. Once the sales data is captured, and a pattern emerges, the company uses an algorithm called the Schemulator to develop promotional schemes for each outlet.
If, say, a particular biscuit variety is doing well at a kirana storeoutlet, then very quickly the Schemulator formulates a discount incentive for that outlet — perhaps a pack of four biscuits for the price of three, which is offered at the shop in next to no time. Given that ITC owns the packaging business, it can very quickly change packaging for individual outlets to match the scheme.
ITC is already moving towards a distributed manufacturing and an integrated warehouse strategy. Once GST happens, a lot more companies will change their warehousing strategy. Currently, taxes determine where companies set up distribution centres. “But once GST kicks in, distribution centres will come up based on where your market is,” predicts Dutta .
He, however, rues that despite being such an important cog in a company’s operational wheel, most companies still do not give supply chain management the importance it deserves.
“For most companies it is not a board-level issue. You won’t find the supply chain head sitting in the board. You will have a marketing guy, a finance guy on the board, but the GM Logistics will be reporting to the finance guy,” he says.
However, a recent high-profile announcement from ITC headquarters is the appointment of its trade and marketing distribution head B Sumant as the President of its FMCG business. Shows which way the wind is blowing?
(Published in The Hindu Businessline)
Packaging of products is, undoubtedly, an extremely strong means of conveying the essence of the brand, its ethos and its personality.
Packaging is not only a vehicle to endorse the identity of a brand in a consumer’s mind, the growing need for sophisticated packaging also results from many lifestyle needs such as ease of transportation, storage, usage and disposability sought by convenience seeking and time pressed consumers.
But, increasingly, it also reflects the brand’s responsibility and sensitivity towards Nature and its resources.
If we, as consumers, were to reduce or optimize packaging from our daily lives, especially for food and beverages, there will be a redefinition of the processes involving our purchase and usage. It will also to a larger degree alter the systems and processes of organisations whose distribution and retail is integrally dependent on packaging.
Original Unverpackt, a concept grocery store in Berlin, Germany operates without food packaging that would later turn into garbage. The idea around which it is build is to bring one’s own containers and have it weighed. The supermarket will label your containers. After one shops and gets to the till, the weight of the containers is subtracted and one has to pay for the net weight of the groceries. The label is designed to survive a few washings so one may come back and skip the weighing process for a few more times. In this way, not only do the food products shed their familiar identifiers (brand colors, packaging structures, and bold logos) but the ways they move from shelf to home becomes radically different. While shoppers are encouraged to bring their own bags and containers with them, a range of re-usable jars and containers are also available for purchase onsite. As much as possible, produce is sourced locally.
At this point of time, it may seem difficult to adopt this framework in entirety. However we should remember that just a few short decades ago we followed similar practices such as engaging biodegradable, recyclable, reusable materials for packaging, making use of one’s own containers and bags and filling them in with quantities as per the requirements from the bulk containers.
Singapore’s National Environment Agency (NEA) will be introducing mandatory requirements for companies to use sustainable resources in packaging and reduce packaging waste very soon. It is still being decided in what forms the regulations could be developed, but the preliminary ideas include requiring companies to submit annual reports on how much packaging they use, to develop waste reduction plans, or to meet recycling targets. Belgium on the other hand has been championing the cause of waste management by maximizing recycling and reusage.
The global trends are moving towards sustainable packaging given the ecological resource wastage it creates, the garbage the packaging material produces and the air and the ground water pollution the landfills create. Earth Overshoot Day, which marks the date when humanity’s demand for ecological resources and services in a given year exceeds what Earth can regenerate in that year, is arriving progressively earlier and earlier, indicating that the humanity’s resource consumption for the year is exceeding the earth’s capacity to regenerate those resources in that year.
Another very grim consequence that was witnessed is the frightening and highly visible impact on marine life – since the start of this year more than 30 sperm whales have been found beached around the North Sea in the United Kingdom, the Netherlands, France, Denmark, and Germany. After a necropsy of the whales in Germany, researchers found that four of the giant marine animals had large amounts of plastic waste in their stomachs. Although the marine litter may not have been the only cause of them being beached, it had a horrifying consequence on the health of these animals.
Given the serious consequences and the growing sensitivity towards these consequences, it is imperative for product manufacturers, raw material manufacturers and equipment and technology providers to design packaging with solemn intent to address sustainability.
The best time to reduce the use of packaging was 50 years ago. The next best time is now.
Sulekha Nair, Firstpost
Mumbai, 11 August 2016
The festivals are round the corner. And it is
that time of the year when online discount offers start raining. If you
had thought this year it is going to be different due to the change in
FDI rules of the government, you should be happy that it is not so.
This year too there are online discount offers – marking the Independence Day. Some like Snapdeal’s Wish for India sale is offering up to 70 percent off to coincide with the 70th I-Day celebrations. With Ganesh Chaturthi and later Raksha Bandhan too around the corner, there are indeed reasons for the consumers to be happy.
But the question that begs an answer is are the e-commerce marketplaces flouting the rules while offering these discounts. When the government allowed for 100 percent FDI in the e-commerce sector, it stated that, “E-commerce entities providing marketplace will not directly or indirectly influence the sale price of goods and services and shall maintain level playing field.”
The rule is clear that marketplaces should not indulge in online discount sales. So how are these companies doing this? Are they stocking up on inventory and selling goods?
Unless one knows that is the truth, there is no way one can say for sure that they are flouting the rules. Anil Talreja, Partner, Deloitte Haskins & Sells, says that the “regulators have made the law clear and no one will flout the law.”
The offline players have been in the discounting game much longer and
earlier than the online players. “When malls were set up, there were
many who offered goods in exchange for old clothes, newspapers, etc.
They can’t complain with what the online players are doing as they did
the same,” points out Prof. Pradeep Pendse, Dean, E-Business, Welingkar
Institute of Management.
The physical space has been having a lot of heartburn of sorts. Any business has to be viable not just in the short term but in the middle and long term as well. But the quantum of discounts given online is unsettling the offline players.
There is no way of knowing, said an analyst, whether the discount is being offered by the online marketplace or the suppliers. “The advertisements say that the online marketplace is offering the discounts. No one says that x or y supplier on the marketplce is offering the discount and so one never knows,” points out Kumar Rajagopalan, CEO, Retailers Association of India (RAI), a not-for-profit organisation.
The government has come out with regulations at different points of time which have placed barriers in FDI in retail.
“Most of the internet companies have raised funds from venture funds and private equity which are funds sourced from overseas. Domestic players say the marketplace has created a clever structure and the latter is sidestepping or bending the law. The government has been looking at the situation for the last two years and have been looking at attracting FDI. When the government comes out with more conditions, it means more restrictions and then there are more interpretations. However, the fact is what is needed is a level playing field,” says Devangshu Dutta, Third Eyesight – a consulting firm that focuses on the retail and consumer products ecosystem.
Online players are rapidly gaining ground and offline players are jittery about the former’s growth. What is calculated to ascertain the former’s growth is GMV or gross merchandise volume to indicate a total sales value for merchandise sold through a particular marketplace over a time frame. Yet, GMV per se is not the exact right metric though it is a popular one.
Going by GMV figures, India’s retail market is around $500 billion while the online share was at $10 billion in 2015 and is expected to be in the reach of $18-20 billion in 2016.
China had a retail market of around $650 billion in 2015 and is expected to be worth $10.3 trillion by 2018, compared with the $5 trillion in sales projected for North America, according to a PwC report. The overall market of retail in China is about $2 trillion.
A discount being offered online is a tricky affair. For example, if someone who has a brand store on Amazon and decides to launch a discount and Amazon publicises it, then it is not a discount being offered by the marketplace. So within the current rules, what Amazon is doing is permissible.
On Flipkart, some brands have brand stores and if they themselves discount it, it is fine as per existing rules. Historically, the issue is how much is the brand discounting and what is the online marketplace offering on top of it, if it is.
Will the issue ever get solved? Every time an online player announces a discount, will the offline player see red? Many see it as an issue of governance.
Terming it a ‘political’ issue, Pendse of Welingkar Institute says that with the government focusing on jobs and aiming to make jobs available, the aggregated marketplace will lead to many people losing their jobs.
So will there be a middle path that both can traverse? “Depends on the government and which constituency it wants to protect,” he remarks.
Dutta says that it is a governance issue if there is a monopoly or oligopoly, as it is not restricted to one kind of business. What is needed is to strengthen governance.
As of now, the government seems to be finding it difficult to make up its mind on the issues regarding the retail sector.
(Published in Firstpost)
The cold chain sector is expanding quickly due to increased investments from Indian and international organisations going towards both modernisation of the existing facilities and establishment of new ventures. Over the last few years cold-chain has gained a buzz, finding its way not only into industry presentations but also into budget speeches in Parliament. It is widely reported that India needs to build more cold chain capacity, especially to reduce the enormous amount of waste of food products in the chain from farm to consumer.
India is one of the largest producers of agro-products i.e. fresh fruits and vegetables, milk and related products, fishery products and meat. However, due to lack of the required facilities, spoilage of products is comparatively high.
In recent years, significantly incentivised both by business logic and by tax breaks, there has been a fair amount on investment in cold storages. However, the sector is still highly fragmented; there is inequitable distribution of cold storages, interlinkages between storages is also very poor and many facilities are also operating below capacity.
The National Centre for Cold Chain Development (NCCD) reported that as of December 2014, 70% capacity was utilised, where the total number of cold storages available in India was around 5300 and approximately 6000+ vehicles, providing about 30 Million Metric Tonnes capacity of storage. Most of these facilities are located in the states of Uttar Pradesh, Uttaranchal, Punjab, Maharashtra and West Bengal.
Storage and transportation capacity is only the very first step in strengthening cold chain capabilities but, unfortunately, that is where many entrepreneurs and investors in cold-chain are stopping their thought process. Many players in the industry have been using obsolete machinery, and storages are majorly for a single commodity. The result, predictably, is underutilisation of capacity or mishandling of food products leading to operational problems, cost escalations, spoilage and other losses. Just to mention a simple example that many seem to forget: even domestic refrigerators have at least 3-4 temperature-humidity zones: the freezer, the chill tray, the large cool area, and a vegetable tray. In comparison, many cold stores are built without adequate thought to the various influencing factors. It’s important to recognise that in developing a cold chain capability, the products to be handled, the environment in which the cold chain will operate, not only storage but intake, handling and transportation, all have a role to play.
With a fragmented operating environment, both in terms of production as well as distribution, often a single investor or company may not be able to create the business logic to set up a cold chain facility. Collaboration between multiple individuals and agencies may be a way out.
An example of successful use of integrated cold chain is the Tamil Nadu Bananas Growers Federation. Banana growers in the Tamil Nadu belt were diminishing due to lack of appropriate storage facilities, and farmers were forced to sell produce at throw away prices. With introduction of integrated cold chain solutions, the federation of farmers from Tamil Nadu has now managed to gain a hold of the banana market again. They have managed to increase their income manifold by growing better qualities and storing bananas for longer period of time in the integrated cold chains.
Cold chain logistics in the true sense begin with harvesting and post-harvest handling, going on to controlled atmosphere vehicles, cold storages, sorting and grading facilities, modern pack houses and controlled atmosphere retail stores. Most importantly, even operational know-how is something that is not made part of the investment plan, leading to unviable, unprofitable cold chain facilities.
The focus should be to integrate the cold chain, and also build capacities in all areas. As per NCCD (December 2014), India has approximately 6,000 reefer vehicles against a requirement of 60,000. Similarly the number of pack houses available is 250 and the projected requirement is for 70,000. Hence, the need for a more balanced investment in terms of modern pack-houses, refrigerated transport units and ripening chambers is evident and will bring far better results, both operationally and financially.
In addition, there has to be a significant improvement in developing the know-how and skills sets available to the sector. While the country is faced with large-scale unemployment annually, a well-thought out development of the cold chain sector including due investment in knowledge-based initiatives can create significant numbers of better paying jobs around the country, especially in rural areas from where the produce is sourced.
With development of the consumer and retail sector supporting its growth, integrated cold chain development should be at the top of the agenda for government as well as for private business.