India E-Commerce Logistics Market Outlook, 2027-28

E-commerce market in India has been experiencing astonishing growth and successfully changing the way people transact. Increasing internet and smart phone penetration, growing acceptability of online payment and favourable demographics has provided a unique opportunity for e-commerce companies to connect with their customers. E-commerce is probably creating the biggest disruption in the retail industry and this trend will continue in the years to come. Almost everything is sold on the internet now and this means that pretty much all of the retail industry faces the challenges of either being a part of e-commerce or taking head on. E-commerce is also playing a major role in driving the demand of e-commerce logistics for distribution and range of goods or parcel to the end consumer. During festival sales in September and October, businesses boom in the logistics and courier companies of the country.

According to 'India E-Commerce Logistics Market Outlook, 2027-28', e-commerce logistics market is anticipated to reach more than INR 41000 Crore market size, registering around 15% CAGR. The market is dominant by Blue Dart in India holding more than 15% market share. However, the industry is fragmented with 14 different players holding 90% of the total market. E-commerce focused logistics service providers like Delhivery and Ecom has also been gaining traction in the market by holding more than 20% of the market share together. Moreover, Captive logistics arms Amazon transportation and GoJavas have increased the competition in e-commerce logistics and both the players together hold more than 25% of the market share. Logistics is a key enabler of e-commerce and also a source of competitive advantage and differentiation for e-commerce companies.

Traditional logistics involved the movement of goods from manufacturing hubs to consumption centres via a linear routing mechanism. E-commerce logistics is a combination of 'one to one', 'many to one', and 'one to many' routing based on goods availability and destinations. The logistics needs of e-commerce firms are evolving rapidly. This involves scaling up to meet service levels, increased focus on tier II and tier III cities, COD and reverse logistics. Logistics service providers in e-commerce retail industry are coming up with innovative logistics models such as outsourcing last mile deliveries to Hyperlocal e-commerce logistic service providers.

There is also increasing trend of e-commerce retailers managing special services such as time bound deliveries, card swipe at delivery and other value added services in-house, while outsourcing the standard deliveries to 3PLs. However, with the growing demand from customers and the need to attain a competitive advantage, specialised services might increase in the near future and thereby, resulting in the outsourcing of these services to 3PLs as well. COVID-19 has been one of the catalysts that have accelerated the adoption of online purchases, resulting in significant demand and supply-side changes in the e-commerce space. The online-focused players partner with third-party logistics (3PL) providers to manage delivery, inventory, packaging, shipping, warehousing, and tracking issues. Major percent of the e-commerce logistics market is outsourced, providing headroom to specialized logistics service providers (LSPs) and consolidators.

As of fourth quarter 2020, Amazon accounted for close to 3 million shipments per day, followed by Flipkart plus Myntra at around 2.5 million per day. All the other horizontals and verticals, including Meesho, ShopClues, and Snapdeal, accounted for about 2.5 million daily shipments. Amazon’s shipping wing — Amazon Transportation Services — accounted for about 80% to 85% of its shipments (about 2.75 million per day), up from about 55% to 60% just three or four years ago. Flipkart’s shipping wing, Ekart, and Myntra’s, Myntra Logistics, handle about 65% to 70% of their combined firm’s shipments (between 1.5 million and 1.7 million per day), which has not changed much over time. The remaining business is shared by specialized third-party logistics companies including Delhivery (about 2 million shipments per day), Ecom Express (about 1 million), Xpressbees, and more conventional players like Blue Dart.

In addition to the infrastructural inefficiencies, a high return rate and a high share of cash on delivery (COD) orders also drive the cost of deliveries. The return rate for overall e-com retail is driving up the logistics costs. The value proposition of consolidators is also expected to mature and become established with time as they build capabilities to create differentiation. Most small and medium-sized businesses use consolidators because they need better prices and access to a broader range of LSPs to meet their unique needs.

Further, the increased internet penetration has also played a pivotal role in boosting online purchases. In 2020, there were approximately 150 million online shoppers annually, compared to about 135 million online shoppers in 2019 in India. Digital India program has driven the number of internet connections in 2021 to 830 million as per the data from India Brand Equity Foundation. Out of the total internet connections, 55% of connections were in urban areas, of which 97% of connections were wireless. India’s overall smartphone market grew by 7% in 2021. The number of smartphone users in India is expected to reach 887.4 million by 2030 which clearly shows the increase in the number of users. India has the highest data consumption rate worldwide at 14.1 GB of data per person a month.

With this, several e-commerce logistics players are focused on expanding their delivery networks to cater to customers across remote locations. For instance, in 2018, Ecom Express Pvt. Ltd. announced its service expansion by 8,000 PIN codes across India. Thus, rising number of e-commerce players, coupled with increasing social media usage as well as the expansion of services to remote areas, offers lucrative growth opportunities to the e-commerce logistics market in India.

The competitive landscape of the Indian e-commerce logistics market is observed to be fragmented, as the demand for logistics services is growing rapidly across the region, companies are becoming more competitive to capture the huge opportunity. The policy support from the Indian government has allowed 100% FDI in B2B e-commerce and the recent rise in digital literacy has led to the new international players setting up their base in India. This has in turn led the international logistics players to make strategic investments by establishing a regional logistics network, such as opening new distribution centers, smart warehouses. Some of the leading players include FedEx Corporation, DHL, Aramex, etc.

Since 2014, the Government of India has announced various initiatives, namely Digital India, Make in India, Start-up India, Skill India and Innovation Fund. The timely and effective implementation of such programs will likely support growth of E-commerce in the country. Further, government initiative in infrastructure development and GST implementation has affected the market in a very positive way. The logistics service providers are now at liberty to draw location of warehouses and network routes resulting in building an agile and efficient supply chain model.

Recent Development

June 2022: Delhivery (an Indian logistics and supply chain company) has guaranteed same-day delivery (SDD) service in 15 cities and is seeking to help brands win customer loyalty. Delhivery has partnered with brands and identified fast-moving SKUs and keeps them in the warehouses closer to end customers. When the customer places the order for the same, then Delhivery's technology will show the fast-moving SKUs available for the same-day delivery.

July 2022: Panattoni (a global player in industrial and logistics real estate development) has decided to invest US 200 million in India to develop four industrial and logistics parks across major cities like Delhi, Mumbai, Chennai, Hyderabad, Bengaluru, and Pune. The company is in discussion with land owners to purchase around 250 acres of land for the development of four industrial and warehousing in an integrated park.

Covid-19 Impacts:
The COVID-19 pandemic has resulted in fuelling the growth of the e-commerce logistics sector. E-commerce players are seeking alternative warehousing locations to help in the continuity of their business, along with mitigating delivery delays. With the rising awareness for social distancing among Indians, people have started opting for online platforms more than before, even in rural areas. Further, extended lockdowns in several countries have resulted in disrupting the supply chain. E-commerce logistics players are leveraging options, such as contactless deliveries, to mitigate the risk of infection, further boosting the demand for online sales. Also, several retailers across the country are going online to expand their reach. It has offered a wider choice of goods to the customers at competitive pricing, thus boosting e-commerce sales. For example, blockchain revolution has further advancing the e-commerce logistics business by empowering clients to keep a track. This innovation would benefit e-commerce logistic business to run more cost-effective.

Covered in the Report:
• India E-commerce Retail Industry
• India Logistics Market Overview
• India E-commerce Logistics Market Outlook
• India Postal Service Market Outlook

'India E-Commerce Logistics Market Outlook, 2027-28' discusses the following aspects of e-commerce logistics in India:
How it will help solving your strategic decision making process??
The report gives an in-depth understanding of e-commerce logistics market in India:
- India E-Commerce Retail Industry Market Size By Value & Forecast
- India E-Commerce Retail Industry Market Size By GMV & Forecast
- India E-Commerce Retail Industry Segmental Analysis: By Company, By Category, By Channel, By Payment Mode, By Region, By Tier, By City, By Gender
- India Logistics Market Overview (Surface Express, Air Cargo and Railway Parcel)
- India E-Commerce Logistics Market Size By Value & Forecast
- India E-Commerce Logistics Segmental Analysis: By Company, By Category, By mode of transportation, By Region, By service
- India Postal Service Market Size By Value & Forecast
- Logistics Aggregator Overview
- Online Transporter Aggregator Market Overview
- Pricing Analysis
- Key Vendors in this Market Space
- Competitive Landscape & Strategic Recommendations

This report can be useful to industry consultants, manufacturers and other stakeholders to align their market-centric strategies. In addition to marketing & presentations, it will also increase competitive knowledge about the industry.

Report Methodology
The information contained in this report is based upon both primary and secondary research. Primary research included interviews with various channel partners of e-commerce logistics in India. Secondary research included an exhaustive search of relevant publications like company annual reports, financial reports and proprietary databases.

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