India's e-commerce companies are adding delivery personnel at a rapid pace, fearing a labour shortage might cause them to lose out in one of the biggest annual shopping seasons that begins in earnest next month.
The moves come amid a tightening job market - India's unemployment rate fell below 7 per cent in July for the first time since January - and persistently high inflation, complicating the outlook for the industry which has long battled chronically high employee turnover. read more
"Overall demand for the gig workforce has seen a sharp increase and that is not completely supported by the increase in pool size of delivery people... It is not a free flowing pool," TK Balakumar, chief operating officer at online grocery seller BigBasket, told Reuters.
The company, backed by the Tata group conglomerate, has ramped up the number of delivery partners in its instant delivery segment BB Now to 2,200 in the quarter ended June, from just 500 in the March quarter. It aims to further raise the number to about 6,000 by March 2023.
BigBasket and other e-commerce firms such as Dunzo have their own personnel for delivery, while others such as cosmetics-to-fashion retailer Nykaa (FSNE.NS) rely on third parties for providing the service.
Gig work employment, of which delivery workers and salespersons form a large chunk, is expected to reach 9.9 million in India in 2022-23, up about 45 per cent from 2019-20, according to a report in June by think tank NITI Aayog.
"People... look at a delivery job as a job in transit, they move off to something else, you'll always have shortages and then in cases where there is a specific event or festival, there's definitely a challenge that the delivery requirement goes up," said Sekhar Garisa, strategy chief at business services provider Quess Corp.
Companies like Quess and TeamLease (TLSV.NS) act as middlemen between e-commerce firms and job seekers in Tier 2 and Tier 3 cities in the country.
Some firms were optimistic the labour crunch situation will get better.
"There's a constant churn and movement that has existed for 4-5 years. It can cause a temporary crunch but we don't think it is a long term thing because supply and demand will match," Kabeer Biswas, chief executive officer at Dunzo, told Reuters.
Backed by Indian billionaire Mukesh Ambani's Reliance, Dunzo currently has 75,000 delivery partners.