What the Growth of E-Commerce in India spells for its Logistics Sector?

A Bank of America Report states that the Indian e-commerce market, by 2025, will be worth $220 billion. In the last few years, we have seen not only newer Indian e-commerce companies cropping up, huge investments flowing in, and international chains making their foray into the Indian market by tying up or acquiring the Indian ones. Take the recent news of Walmart acquiring a majority stake in Flipkart to enter the Indian market. This move will provide stiff competition to Amazon which already has a large customer base, dominating 40% of India’s online retail market. Not long ago, Flipkart announced it will be setting up a brand new logistics park near Bangalore, the biggest in India, overtaking rival Amazon.

With so much happening in the e-commerce sector and so much competition within a single sector, what will it be that sets these businesses apart? The game-changer in these operations will be the speed of delivery if one takes the quality of the product and extent of innovation at a constant. It would not be an exaggeration to state that how efficient, safe, and fast the goods transport services work, will be the determining factor for e-commerce players to get ahead in the game. In fact, India’s internet growth story is most likely to be dominated by logistics.

Let us see how what growth in e-commerce spells for the logistics sector and vice versa in the coming years:

Tier-II cities are likely to become huge markets for e-commerce companies in the next 5 years. Likewise, the estimated shipment volume is also expected to grow from 13% to 40% by 2020. It is here that the logistics sector will have to really innovate primarily because in these fast-developing, small cities and towns the demand is highly disaggregated.
A lot of investment is expected to flow into hyperlocal businesses and start-ups mainly due to the increasing internet penetration, easy online payment options, and use of demographics and location tracking devices. Whether these hyperlocal businesses are in the restaurant space, pharmaceuticals, or grocery space, it is a huge opportunity for a logistics network to provide efficient models for transportation of goods and services.

A rise in the method of pooling orders or making the delivery process more efficient by planning ahead is predicted to bring a lot of changes in the way in which the logistics sector operates. A case in point, about 90% of trucks in India still belong to single-truck owners. Getting into this space opens a big opportunity for delivery-truck hire businesses where innovation in aggregation and connectivity will play a major role.

The new-age start-ups are increasingly bridging the demand-supply gap whereby with just a touch on our smartphones we can have electronics delivered within an hour, hire a truck for shifting or order groceries. The opportunity is huge and it will be interesting to see how the Indian and global internet players make use of it and in turn what that spell out for India’s logistics and vice versa.

What the Growth of E-Commerce in India spells for its Logistics Sector?

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