eCommerce forms a leading factor in the growth of India’s logistics industry: CBRE

EcommerceDespite of India facing weak economic scenario, the logistics and warehousing industry continued to witness growth during the first half of 2013 as per property consultant CBRE. The impact is said to be due to the growth in retail, eCommerce and manufacturing sectors.

With eCommerce evolving at a rapid speed in India, logistics is becoming a key support factor in the success of both the existing and new entrants. Not only are the eTailers trying to increase their delivery speeds, but they are also trying different models to fulfill eCommerce orders effectively.

For instance, recently Myntra galloping the 48 hours product delivery time, switched to one hour delivery for its customers in Delhi and Bangalore. Also Indian Logistics has seen an increase in the last mile delivery companies, which is led by entrepreneurs with no or low background of logistics, hence the industry is experiencing a lot of innovation. Delhivery for example is led by young entrepreneurs and is delivering great results in the last mile delivery sector.

Considering logistics and e commerce as a lucrative sector, leading experienced professionals from logistics industry launched eComm Express two months back.

This segment has given an increase in boost to the partnerships between eTailers and third party logistics, thereby attracting investments from major VCs and angels. The latest being the logistics Delhivery raising USD 5 Mn from Nexus Venture partners.

As the Indian eCommerce exhibits signs of maturity, the major eCommerce companies have been seen putting aside large budgets to maintain their logistics and supply chains. Recently, Flipkart raised USD 160 Mn, making its total raised investments to USD 360 Mn. As said, a part of the sum raised will be utilized in developing technology and supply chain capabilities of the company.Thus giving a glimpse of the importance, logistics make for a leading online marketplace of the country.

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As per Rahul sethi, Cofounder and CEO of Ladyblush.com, currently indian eCommerce industry is having a size of approx. USD 1 Bn and it competes with USD 150 Bn for China and bigger for US. In order to be in game, over the last 5 years, a significant amount of investments have gone in building technologies, processes, logistic capabilities, awareness, discounts and above all, inventories- to be able to provide desirable buyer experience and hence build affinity & acceptability towards the medium.

However, it does not end here. With more than half of the online sales dependent on COD, maintaining logistics and delivery is quite a big challenge for the etailers. While COD is essential in a nascent eCommerce market, it can have a large negative impact on business margins, as the return rates can be quite high. As reported by Forrester, in India, the return rates can vary from 5% to more than 25%, depending on the category, the demographics of the online buyers, and their online tenure (experience with the Internet).

Amid all these opportunity and challenges, the logistics segment in India continues to grow mutually with eCommece growth, and may be faster than eCommerce. The entrance of some major brands like Coca-Cola, IRCTC, Titan industries, etc depicts that the eCommerce is the future. Initiatives taken by Indian Post to enable eCommece show the belief of this country on future of ecommerce. And the size if investment gone in eCommerce, certainly shall push the entire support system, logistics being the first one.

Iamwire strongly believe that logistics in this country was in poor shape, shearly because the big players did not seem to have believed that it is important to make investment when everyone can live with basic level of services, as the same companies were providing unmatchable services levels in other countries. But today, in the time of consumer centric retailing, with less and less loyalty, the pressure is being realized by all to do whatever and get to state of the art services levels for Indian Consumers also.

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With growing consumer awareness, expectations, and needs, all driven by Online media, India shall experience growth in all sectors linked to providing Indian people what they wish, and in the best way.

To contact author, email at meha@wirefootindia.com

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