Referral schemes make inroads into logistics sector

Referral schemes have started catching up in the domestic logistics sector, albeit discreetly.

The scheme, which exists only “informally in India”, entails providing commission to existing customers for referring new customers — a practice prevalent in developed countries.

DHL, for instance, had last year launched a “referral scheme” for its customers in the US. The scheme, launched for small and medium businesses, offered discounts in transportation charges to its existing customers in the segment for providing referrals.

“The discount levels varied, based on the value of business offered to DHL from the new customers,” a company official told Business Line.

Now, similar practices are catching up in India, though many logistics players are unwilling to share details.

“We do not have such referral schemes though they do exist informally,” says Vineet Agarwal, Joint Managing Director, Transport Corporation of India. Safexpress’ Vineet Kanaujia, Vice-President-Marketing, says while his company gets queries based on referrals by corporate clients, there is no “organised scheme per se that provides discounts to existing customers.” Blue Dart, in which DHL has a majority stake, refused to comment.

Volume discount is the prevalent form of incentive in the logistics sector. For instance, Container Corporation of India provides total volume discounts of over Rs 30 crore annually to its customers who commit incremental cargo of certain levels.

“As of now, we are not aware of any commission being offered for providing referrals, but as the logistics players themselves are working towards a cost-effective model, this may become a norm for the industry,” says Kashyap Deorah, President, Futurebazar.com, the online platform of Future Group.

Subrata Dutta, Managing Director, Samsonite India, says despite logistics costs being a significant 7-8 per cent of the total cost, the company is not aware of any such commissions being provided by its logistics service providers. He, however, added that he would discuss this strategy with his logistics service provider.