Indian e-commerce firms are adding delivery staff at a rapid pace, fearing a labor shortage could see them lose out during one of the biggest annual shopping seasons which begins in earnest next month .
The moves come amid a tight labor market – India’s unemployment rate fell below 7% in July for the first time since January – and persistently high inflation, complicating the outlook for the industry. which has long struggled with chronically high employee turnover.
“Overall demand for gig labor has seen a sharp increase and this is not fully supported by the increased size of the delivery pool…It’s 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, increased the number of delivery partners in its BB Now instant delivery segment to 2,200 in the June quarter, from just 500 in the March quarter. It aims to further increase the number to around 6,000 by March 2023.
BigBasket and other e-commerce companies such as Dunzo have their own delivery staff, while others, like trendy cosmetics retailer Nykaa, rely on third parties to provide the service.
According to a report published in June by think tank NITI Aayog, employment in on-demand work, of which delivery people and sellers constitute a large part, is expected to reach 9.9 million in India in 2022-2023, up from 45% compared to 2019-2020.
“People…look at a delivery job as a transit job, they move on, you will always have shortages and then in cases where there is a specific event or festival, there is definitely a challenge as the delivery requirement increases,” said Sekhar Garisa, chief strategy officer at enterprise services provider Quess Corp.
Companies like Quess and TeamLease act as intermediaries between e-commerce companies and job seekers in Tier 2 and Tier 3 cities across the country.
Some companies were optimistic that the labor shortage situation was improving.
“There is a constant turnover and movement that has been there for 4 to 5 years. It may cause a temporary crisis, but we don’t think it’s a long term thing because supply and demand will match,” Kabeer Biswas , CEO of Dunzo, told Reuters.
Backed by Indian billionaire Mukesh Ambani’s Reliance, Dunzo currently has 75,000 delivery partners.