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The Rediff Business Interview/Douglas Lewis

'Shopping at a store isn't a low-cost proposition'

Logistics, says Douglas Lewis, vice-president (Asia Pacific and the Middle East), DHL Worldwide Express, is going to play a decisive role in the fortunes of corporates in the new millennium. A Ganesh Nadar interviewed him recently in Madras. Excerpts.

Is DHL Y2K-compliant?

Yes, we have been working on it for two-and-a-half years now. It is my responsibility and so I am very familiar with it.

We drew up a master plan in late 1997.We first tested our own systems and applications. From January 99, we have been looking at our customers' applications.We look at various possible crises. What happens if there is no power, what happens if there is no water, what happens if there is no public transportation...?

We have a business preparatory team. Each one of us is working on contingency themes, we call it contingency management. We have arranged alternate power supplies. All our senior management will be on duty from December 28, 1999 to January 2, 2000.

I will be on duty on the night of December 31. I will watch the millennium coming in from my office. DHL India has the same dedicated team.

What is the role of e-commerce and its impact on DHL's business?

Today in Asia Pacific, 59 per cent of our transactions are online. We will be bringing in a product called DHL Connect in the first quarter of 2000 to India.

All our customers will be connected through it. We want 100 per cent connectivity. There are certain countries in Asia where this will not be possible. We have achieved about 98 per cent connectivity. We are very happy to bring DHL Connect to India. So that is for our customer access.

In the customer business, we find that many of our customers are already doing business with their partners on the Net... electronic business. It is EDI (EDI - Electronic Data Interface) driven, that is, the Web system. When you cannot buy something at your local store, you buy it on the Web and have it delivered to you.

We believe that this business is only 14 per cent now. DHL is looking at a three-year horizon.

E-commerce will eliminate the store front but it will require a home delivery system. The question is, who is going to pay for it? We have 26 such trading stations. For the largest on the Net, Amazon.com, we handle 15,000 deliveries every day. They pay for it, Amazon.com, they subsidise it to increase their volumes.

In the long run, the consumer will have to make the decision. Are they willing to pay for the goods to be delivered to their homes? Shopping on the mall is not a low-cost propositon. You have accessibility to the products on the shelf but they do not cost less. That will be the trade-off. Business-to-business will definitely be the large part of this business.

What logistical changes will be necessary?

DHL is geared to the commercial buyer where we are sure that there is somebody to receive it, it is expected, he knows that it is coming. The home delivery is much different. Many times there is nobody there, they don't know it is coming and don't want to receive it. And they want you to take it back after they open it and don't like it. At an usual store, if you don't like something, you can put it back. You see, this shirt which I purchased last night, because my baggage got lost, I like it, but the first one, I sent it back.

DHL lost your bag?

No! It was the airline. I am hoping for a strong service recovery from them.

If I had bought this shirt on the (World Wide) Web and it doesn't fit I will want to send it back. And they will expect the person who delivered it to take it back. This is something none of us are really prepared for.

One, we are signing strategic alliances with post offices. We just anounced a strategic alliance with the United States' post offices. We deliver to the US post office and they are delivering for us.

Then, can you control the delivery time schedules?

Yes, that is a very significant question for India. I think that will come to the accessibility versus cost trade-off. We believe that there will be world wide shopping malls on the Web which everybody including India will use.

We believe that customs barriers, taxes barriers will come down everywhere and in India. We believe that we can bring the top system to India. I can't comment on the postal system in India. We think that the Indian post office will continue to strenghten itself. It won't happen this year but there is a window at the horizon: it will definitely work.

Are you planning to expand your air network?

Our strategy is to never fly an airplane. We only fly when our airline partners cannot provide us with the infrastructure support. In India, we work through Air Freight. We do fly 17 planes in the Asia Pasific and that is only because our airline partners cannot fly to provide the overnight service that we want.

What has been the impact of Fedex and UPS's forays into the Indian market?

It is marvellous that they are here. We think that they will help make the market larger. As the market increases, the customer will make the decision based on who provides the best solutions. We are very confident that in India, our market will continue to grow.

Is it true that DHL is planning to invest in India's infotech sector?

We are the leaders in Web-enabling technology. It requires hard work in research... we have a large group of people, sort of a think-tank, working in Silicon Valley. We are very proactive in a country like India. DHL Connect is a Web solution which any shipment of any size can use.

If the Indian government decides to privatise the postal department, will DHL volunteer to take it over?

No. We would not look at that type of business. We are looking at electronic commerce. We want the post office to do the actual delivery.

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