Retail company: Online orders could soon cost a bundle as fuel prices soar

Bengaluru: Rising trade fuel costs have now led major logistics companies to increase their freight charges for e-commerce shipments. This may impact final prices for online consumers, as sellers consider passing on higher freight costs to the consumer.

Delhivery, one of the largest third-party e-commerce delivery companies, has decided to increase freight charges by 30% effective April 1 for ‘Delhivery Air and Surface’. Logistics aggregator Shiprocket, which works with Delhivery, told customers of the sharp increase in charges from Friday. ET reviewed the note. “This is due to the sharp increase in commercial fuel prices over the past few weeks and other systemic factors in logistics markets.”

The decision to raise transport charges comes at a time when petrol prices have crossed the 100 rupee mark in several major cities. The price of diesel has also hit the Rs 100 mark in Mumbai.

Delhivery did not respond to ET’s question by Thursday’s press time.

Another major e-commerce delivery company, Ecom Express, is also considering a similar price increase. “Costs have gone up, so there is a correction needed,” founder TA Krishnan told ET. “We’re looking internally because even to put our own infrastructure in place, the cost of steel has gone up, rents have gone up, we’re looking at but we haven’t made a decision on that yet.”

Sellers have to pay shipping cost to third party logistics companies or directly to Flipkart and Amazon India. Flipkart and Amazon are the biggest customers of companies like Delhivery and an increase in shipping costs will impact online sellers’ revenue per order. Typically, independent online sellers pass on at least some of the price increase to consumers when marketplaces or delivery companies change their various fee components.

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“I don’t think the cost would be borne by the platforms, it’s likely to be borne by the seller. And the seller will pass it on to the end user,” Krishnan said.

Sellers ET spoke to said they have yet to receive communication from Amazon, Flipkart or Meesho regarding any freight rate increases, but expect to pass the additional cost on to customers. increasing prices as costs rise.

“We haven’t received any communication about this from any platforms yet,” said Aniket Ghosh Chaudhary, co-founder of audio brand Mulo, which sells home audio and headphones primarily on Amazon India and its own website. He said that historically Mulo had to raise the price of the product due to rising fuel prices. Ghosh said that a year ago the cost of shipping a home audio product was 250 rupees, but now it costs 300 rupees due to rising fuel prices. These costs have always been passed on to customers when customers order from its website.

Anshad Aboobacker, a children’s clothing seller primarily on Meesho, also said there has been no communication from the platform yet. “We do not deal directly with Delhivery or any other third party logistics as it is fully supported by Meesho. So far, we have not received any message from Meesho regarding cost increase,” he said. declared.

Meesho relies entirely on third-party logistics companies as it does not have its own logistics department unlike Flipkart and Amazon India, which have their own logistics arms – Ekart and Amazon Transportation Services, respectively. A significant portion of Meesho’s orders are delivered via Delhivery. The three e-commerce companies did not respond to ET’s questions about this.

Delhivery has also filed an initial public offering (IPO) of Rs 7,460 crore which has been cleared by the market regulator Securities and Exchange Board of India (Sebi).

In an exclusive conversation during the Economic Times Startup Awards 2021, in Bangalore on March 12, Sahil Barua, co-founder and managing director of Delhivery, said that the company has decided to wait for its IPO plans, given the market volatility, which spooked the public market. investors in the first quarter of 2022.

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