A crucial year for e-commerce-focused logistics firms

Logistics in India has typically not kept pace with growth of E-commerce stores and is riddled with inefficiencies and lack of innovations. The exponential growth of the online industry has brought forth the need of logistics companies (focused on E-commerce) to improve their infrastructure and offer a slew of services for their clients. To be successful, logistics companies have to ensure reliability, speed, wider reach and safety of delivery while ensuring a smooth customer experience.

According to Goldman Sachs, India's online retail market is estimated to reach $36 billion (Rs 2.4 lakh crore) in 2016-17, up from $11 billion in 2014-15. Since the E-commerce market is on a growth spree, there is a need for logistics companies to ramp up operations like offering latest technology platforms for their large chunk of clients, namely, the online stores.

Logistics companies need to strengthen their infrastructure, build more warehouses, employ a larger workforce, use latest softwares, and also upgrade their technology to automate the delivery system as far as possible like use of swipe machines on delivery. While delivering products to far off places in India, the logistics firms face issues like lack of surface transport and limited air cargo capacity but the at the same time, logistics companies should find innovative means and methods to improve their reach to Teir-2 and Tier-3 towns as well as rural parts of India since these regions have recently registered a high rate of online orders.

There is some good news on the horizon. According to a recent report by Agility, India ranks third in emerging markets logistics index for 2016, which rates countries based on business environment. The report ranked China and the United Arab Emirates first and second, respectively. The index ranks 45 leading emerging markets using three metrics. Size and growth attractiveness make up 50% of the overall index score, while compatibility and connectedness each account for 25% of the overall score. The index findings use various data on economic output, projected growth, financial stability, population size, market access, FDI, transport infrastructure, etc. The index also conducts a survey of over 1,200 global logistics and supply chain executives who said that the logistics industry has to brace up for more uncertainty and volatility in emerging markets in 2016.

The Indian economy is on a growth trajectory and is expected to grow by 7.3%. This forecast has created a sense of excitement in the industry. The Indian government is considering permitting 100% FDI in the marketplace format of e-commerce retailing with a view to attract more foreign investments. The norms on foreign direct investment (FDI) in the sectors of e-commerce, and IT and ITeS are expected to be part of detailed guidelines, which would be rolled out soon by the government. These steps are further likely to boost the growth of E-commerce sector in India.

Clearly, there is a need for the logistics companies to ramp up their operations and provide efficient services in tandem with the growth of the e-commerce sector. Many E-commerce companies are reinforcing their logistics system. Companies including Flipkart, Myntra and Amazon have their own last-mile logistics support to support the growing demand of online shopping. Snapdeal has bought a large stake in specialty logistics firm GoJavas to improve its speed of order deliveries. Flipkart, has thrown open its logistics services eKart, to third-party e-commerce firms even as the company is gearing up to roll out an inter-city customer-to-customer courier service called eFlash. The logistics footprint of Amazon India has grown by leaps and bounds and it has the maximum number of warehouses and largest storage space among e-commerce firms in India. Paytm, a payment wallet to e-commerce company, has drawn up plans to more than double its investment in the warehouse and fulfillment centres in order to increase its logistics network across the country for the merchants.

StoreHippo’s take

Logistics is the backbone for success of any online store. StoreHippo recognizes this need and offers integration with leading logistic partners like BlueDart, Delhivery, FedEx, Aramex, DTDC, and more.

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