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e-order pile up as logistics crumble [DNA : Daily News & Analysis (India)]
[October 24, 2014]

e-order pile up as logistics crumble [DNA : Daily News & Analysis (India)]


(DNA : Daily News & Analysis (India) Via Acquire Media NewsEdge) Mumbai: Salim Ahmed recently ordered a LED television to take advantage of lucrative deals offered by online retailers in the festive season.

He booked a 32 inch television from Snapdeal.com which was offering the best rate.

"While it was mentioned on their website that the product shall be delivered within 4-5 days, it took around 10 days for the television to reach my residence," he said.

Ahmed is among scores of e-shoppers who have either received their consignments after a huge delay or are still awaiting them.

In a reminder of huge delivery snafus witnessed by UPS and FedEx last Christmas shopping season in the US, dna has learnt a huge number of consignments are piled up (across various locations) at the logistics services providers' end.



The reasons cited ranged from logistics firms' being unable handle the huge number of despatches and the consignments being sealed by sales tax authorities in certain states over non-payment of value-added tax (VAT).

Aakash Moondhra, chief financial officer, Snapdeal.com, said this Diwali season online markets and e-commerce sites had seen a huge increase in traffic. "We have seen a multifold growth in our orders. With the increase in order volumes the delivery may be impacted due to unprecedented delivery demands on the logistics companies. We have not seen delay in our deliveries due to any taxation issues or confiscation though." Most of e-tailers, which use courier services, are facing such problem. Many frustrated buyers are even cancelling their orders and seeking refunds.


Courier delivery services company FedEx is currently facing trouble delivering around 6,000 odd products in Patna "The consignment has been sealed by the sales tax authorities who are demanding payment of VAT on the goods to be delivered. Efforts are being made to speed-up the process but we are still not sure how long it will take for this issue to be resolved," said a FedEx executive.

Meanwhile, orders continue to pour even for the smaller vendors.

Agra-based promoters of a handicraft company Stonkraft, Nitin Gupta and Sachin Gupta, who use e-marketplaces like Amazon, Snapdeal, Flipkart, eBay etc to sell their products, said the market response during the festive season has been very good.

"What is really heartening is that despite a small company we have received orders worth almost 20 times the same period last year. The handicrafts are sourced from Uttar Pradesh that levies no VAT on the products. However, our despatches are now stuck in certain locations especially Bihar for the last 15 days owing to VAT issue. Similar problems also exist in states like West Bengal, Gujarat, Maharashtra and Karnataka," Sachin Gupta said.

On VAT issue, a Flipkart spokesperson said, "On our marketplace, products are sold in compliance with various laws. We clearly mandate to our sellers that they sell products in accordance with applicable laws. The taxes are paid as per the commercial taxes rules i.e. at the point of sale." The e-commerce industry, Moondhra said, is growing rapidly and is expected to grow to a $50-70 billion industry in the next five years and it will employ millions of people.

"The logistics industry will also continue to grow to match this. Goods and Service Tax (GST) implementation will play a critical role in determining how fast the industry grows," he said.

The delayed delivery issue is not restricted to e-marketplace operators, but also is the case with tele-shopping networks and some consumer electronics retail stores as well.

Credit:Ashish K Tiwari & Shahkar Abidi (c) 2014 @ 2014 DILIGENT MEDIA CORPORATION LTD. ALL RIGHTS RESERVED

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