Blue Dart

Solutions for peace of mind

Case Presentation

Group 1BAadith Raman B10061Anshuman Sharma B10071Inderjit Singh B10081Nayan Goswami B10091Rahul Agarwal B10101Smriti Mehrotra B10111Nityam Khanna B10121


Courier Industry Specializes in time-

definite, reliable transportation services Documents Packages Freight

Done via a combination of transport networking that includes Road Rail Sea Air


Courier Industry

Relevance for businesses needing Just in Time manufacturing and retailing techniques Supply Chain logistics

Industry Growth ~30% (Past Decade) Owing to the growing demand for reduced transit time

and early deliveries the industry is forecast to grow at 25% for the next two to three year

International express cargo share to increase 6% (current) -> 40% by 2017

Source: ORG-MARG REPORT


Courier Industry

Operating Costs = Transportation Costs High Level of operating leverage Industry growth linked to volume of the

business generated Growth is driven by macroeconomic variables

directly linked to the manufacturing sector and trade.


Industry – Product Segment Documents

Letters, Financial Instruments and Other Documents Typical weight per shipment is up to 500 gm Growth expectation: 12-15%

Commercial goods Electronic Products Samples Spare Parts Air Conditioners etc.

Air Shipment: high-value and time-sensitive shipments Ground Shipment: shipments have a transit time of 2-5 days.

Both High Value/Low Value


Indian Scenario

Domestic Turnover : Rs 20 bn. 1/6th of China 2300 courier companies – 4 major players in

premium organised segment Blue Dart – 36% Elbee – 20%

Intl Market Leader: AFL-DHL Domestic Packages: GATI Domestic Air Packages: Blue Dart


Indian Scenario

1980’s: Time Sensitive Documents End 80’s: shipment for non-commercial purposes Liberalisation and the export boom in the early 1990s gave a further fillip to

the industry. The end of 1996 saw a slowdown that stemmed from the economic recession

and slowdown in industrial growth International operations are less profitable, compared to domestic operations

Due to the imperatives of revenue sharing of international business with the global partners

Revenue sharing break-up is more favorable to the partner who has a majority share Forces Indian companies to realign their product mix in favour of the more

profitable domestic non-document business 64% of the revenues accrue from domestic operations and 36% from international

operations


Indian Scenario


Indian Courier Industry• Modern courier services started in 1685• Organized courier industry started in 1979 with DHL world wide express

entering India• Aggressive industry growth in mid 80’s: 30-35% p.a.• Entry of local players

– Blue dart, Elbee & Skypack in 1980s– First flight, DTDC, Prakash Airfreight in mid 90s

• International express companies venture into Indian market through tie ups– FedEx with Bluedart– UPS with Elbee

• Growth rate drops to 10-15% in 1996 and picks up in 1998


Industry Structure

Organized Sector

• 20 express companies

• Nation wide coverage

• Operation through own offices or franchisee

Semi-organized

• 2000 companies

• Center specific niche markets (inter-city operations)

• Low value products and services

Unorganized

• Around 300 companies

• Local market operations (intra city)

• Pickup points for large players

Government EMS

• Dept. of post• Express

service (24-48 hr.)


Indian Scenario


Modes of Operation

• Surface– Gati Cargo, XPS– Bulky goods (>10 Kg)

• Air & Surface– First Flight, Blue Dart, Elbee etc– Both low weight & bulky load– Multimodal system- Economy & swiftness


Blue Dart Express Ltd-A Timeline

Founded 1983 Private Limited 1991 Contract with DHL 2002


Blue Dart Operations

• Largest player in domestic segment• 13700 locations• Operates through surface and air modes• Air mode – Domestic priority– Hub & Spoke system

• Blue Dart surface line• Dart Apex• Charter Service, Smart box


Organizational & Technological Systems

• Six regional centers• Branch operations

– Pick-up– Delivery– Liaison with customers

• State of the art track and trace: SMART• Largest private computer network• Net Service level: 99.95• Minimal outsourcing• Runs OTCs on various routes• Emphasis on HRD systems• ISO 9001 certification


Marketing & Advertising• Aggressive sales force

– Responsible for sales collections– Incentives for leads– Stringent sales targets- Individual & location based– “Soldiers in the company”

• Rate contract with customers• Conservative Advertising strategy

– Small strips in business magazines– Emphasis on brand development– Technology in operations, consistency & high service quality

• Selected as Superbrand


Competitors AnalysisParameters Blue Dart DTDC First Flight Elbee Aflwiz

Turnover Rs 458 cr Rs 181.24 cr Rs 153 cr

Presence 17500(India)220 countries

3700(India)200 countries

1559 (India)229 countries

11600(India) 200(India)

Services Offered 1.Domestic Priority2.Blue Dart Surface line3.Dart Apex 4.Smart Box

1.Intl courier & cargo2.Next day delivery3.Internet shopping

1.Letter of Credit2.Priviledge card3.COD facility4.Emotional bond

1.Distribution of documents, parcels and commercial goods

1.Door to door service express2.Intl freight forwarding3.Domestic courier 4.E-commerce

Operating Model

Hub & SpokeSMART

franchisee concept pioneer

OPSMAN, Shopping net

Integrated service network

Air freight forwarding, technology & people

Transportation 5 flights, 3400 vehicles

Smaller planes, 931 vehicles


Strengths•Largest domestic player•N/w covering 13700 locations•Reach to over 220 countries •Invests heavily in technology•Owns dedicated airline with 5 737s•Professional, well trained sales force•99.95% Service Reliability

Opportunities•Indian courier industry 20% YoY•Expansion into newer markets through strategic alliances with local and foreign players•More tech-savvy customers will appreciate value added services provided by Blue Dart•Globalization•Reduction in regulation

Weaknesses•Inability to tie up with RSPs•High fixed costs•Higher prices of services•Founding shareholders don’t have controlling stake, yet are retained in BOD

Threats•Foreign Players increasing their footprint and independent presence in India•Rise of imitators providing similar services to Blue Dart at lower cost•EMS Speed Post , signaling revival of Indian Postal Service•Inability to differentiate itself from competition


Marketing MixProducts• Types of Services

– Domestic Priority -Service through air mode – Service Line - Solution through surface mode– Dart Apex -Multi-modal system of transport

Mix of air and surface – Charter Service, SmartBox etc.

Price• Premium Pricing• Higher cost than other competitors • Domestic Priority – High Cost• Blue Dart Surface Line – Economy Cost• Dart Apex – Medium Cost


Marketing Mix

Place• 6 Regional Centers in Major Cities, supervises many branch locations• Area Location come under branch locations• Blue Dart has direct collection center as well as operating through

franchisees• Door to Door delivery, Airport to Door Delivery, Door to Airport Delivery

Promotion: Delivering more than just Packages • Via Business Magazines, newspaper, mobile touch points • Dress codes for delivery boys and front desk staff to improve visibility• Advertising on electronic channels with the punch line ‘Solutions for

peace of mind’• Credit to customers


Marketing Mix - ExtendedProcess:• Hub and spoke model of distribution• Services categorized as Domestic priority, Blue dart surface line and Dart Apex• One of the first to get ISO 9001 country wide certification by Lloyd’s register quality

assurance. • Efficient technological changes • Dedicated 7 Boeing

– Boeing 737-200 3 – Boeing 757-200 4

Physical evidence:• That element of the service mix which allows the consumer again to make judgment on the

organization. It is an essential ingredient of the services mix; consumers will make perceptions based on their sights of the service provision.

• Speedy deliveries• Computerized Billing, invoices and challans • MobileDart, On-line Pick up, ShipDart


Marketing Mix - Extended People:• No outsourcing• Performance appraisal on net service level that they have achieved during the

year.• Modern HRD systems in use• Incentives to sales team and operations people for leads they provide to sale

team.• Each person is a salesman with a target to achieve and are addresd as soldiers in

the company

Transitioning from a product to a service industry:• Increasing focus on better service experience• Focus on timely delivery to get publicity by word of mouth rather than advertising• Better post payment customer service by increased visibility of the location and

status of the consignments


Big Questions Did Blue Dart do the right thing by

switching partners? Can Blue Dart maintain its leadership

position and ensure sustained growth in the face of growing competition?

The imitation problem!


Outlook Few large players in the organized segment dominate the

Indian industry High entry barriers will provide sustainable growth

opportunities Growth Opportunities

e-commerce will present a huge growth opportunity (B2B & B2C) Third Party Logistics: Companies outsource logistics requirements

in relation to Supplier Chain Management Customer Relationship Management Credit cards market: CAGR of 30-35% in the next five years Increase in Internet banking Custom duties expected to come down


Recommendations : Bridge service gaps

• Service gaps– Difference between what customer expected and what is being delivered

• Different kinds of gaps :– Knowledge– Standard, Delivery– Internal communication– Perception– Interpretation– Service Gaps

• Since it already has an excellent fleet of vehicles for surface transport, it can leverage it to provide other services like Packers and Movers during slump business seasons

• Consolidation with small players in unorganized markets to tap the micro geographic areas too

• Form alliances with corporates as its official courier agency


• Customer needs &

• expectations

• Management definition

• Of these needs

• Translation into design/• Delivery specs

• Execution of design/delivery specs

• Advertising & sales promises

• Customer perceptions of product execution

• Customer interpretation of communication

• Customer experience • relative to expectations

• CUSTOMER• Knowledge Gap (1)

• Standard Gap (2)

• Delivery Gap (3)

• Internal Communication Gap (4)

• Perception Gap (5) • Interpretation Gap (6)

• Service Gap (7)

• (4)

Blue Dart

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Transcript of Blue Dart