India E-commerce Logistics Market, India E-commerce Logistics Industry: Ken Research

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Overview Of E-Commerce Retail Industry Of India

The E-commerce retail market in India has grown by leaps and bounds from its nascent state in the mid-2000s to its current market of ~ USD billion worth of transactions in FY’2020 at a gross level before returns and rejections. Strong government initiatives coupled with reducing prices of Smartphone and data plans by telecom service providers have led to an increase in adoption of internet amongst new users.

Consumer behavior has also evolved wherein e-commerce initially was more of a heavily discounted market place, to today – where many users are seeking convenience of ordering products from the comfort of their homes, rather than visit physical stores.

Other key industry trends include the rapid adoption of Indian regional languages by retailers, significant investments in digital channels such as digital wallets, frequent mergers and acquisitions and more.

Overview Of E-Commerce Logistics Industry In India

The E-commerce Logistics sector in India is at a late growth stage and has evolved as an organized market structure. The Industry has flourished owing to increased internet penetration coupled with changing Consumer shopping preferences from physical stores to online market places from the comfort of their homes.

The E-commerce Logistics Industry has grown at a CAGR of 24.3% on the basis of revenue and a CAGR of 27.4% on the basis of number of shipments over the period FY’2015-FY’2020.

Major growth drivers of the Industry are higher internet penetration, increase in number of Smartphone users, increasing propensity to purchase online, growing demand from Tier 2 and below cities, new technological innovations in the field of data Analytics, IoT, Bid Data, Artificial Intelligence, automation and more, rising consumer expectations for fast delivery services and more.

india-e-commerce-logistics-market

India E Commerce Logistics Market Segmentation, FY’2020

By Domestic/ International Shipments

E-commerce Logistics market of India is skewed towards Domestic Shipments. For International Shipments, Indian merchants prefer mostly selling online to countries such as US, UK, India, Russia and Israel

By Type of Player

In House Logistic players such as ATS, E-kart etc. cater generate larger Revenue in comparison with third party logistic players such as Blue Dart, FedEx etc. in India.

By Payment Mode

Most of the people in India still prefer to pay cash on Delivery rather than use prepaid services like digital wallets. People residing in Metro and Tier 1 cities usually prefer prepaid shipments while Tier 2 and below population still have COD shipments.

By Major Product Categories

Electronics (Mobile phones, Large Appliances, etc.) and Apparel (Clothing, Accessories, Foot wares, etc.) comprise the largest market share in E-commerce Logistics Industry of India.

While electronics have the least return rate, products under the Apparel category have highest rate of return.

By Delivery Time

Majority of e-commerce shipments in India take two-four or more days to deliver. Especially product categories like furniture, large appliances and more take greater time to reach consumers in comparison to other products such as Food and Beverages, Apparels, etc.

By Cities

Majority of online demand in India comes from Metro and Tier 1 cities owing to large internet penetration in these areas. Delhi/NCR, Bangalore and Mumbai are the top three cities with largest shipments in India. Tier 2 and lower Cities is the new emerging segment in the country and will see a high growth basis Shipments delivered in next five years in India.

By Product Return Rate

Indian population still returns/replaces many of its products bought online due to most common reasons such as wrong item received or product not matching. Clothing, Footwear, etc. are the products with highest rate of return in India.

Major Trends Observed in the Industry

E-commerce Logistics Industry of India is witnessing various new developments which are leading to its high growth in the country. Some of these developments are listed below:

Emergence of secured lockers: Several logistic companies have started providing parcel lockers facilities to collect and receive a parcel as per customer convenience.

Entry of Aggregators: In the past decade, several players such as Shiprocket have entered the market to cater to small scale E-commerce Logistic companies in India.

Rising demand of hyper local Deliveries: India E-commerce Industry is witnessing an increasing demand of hyper local Deliveries especially after COVID-19.

Major Challenges faced by the Industry

E-commerce Logistic Players in India still face several challenges in the country. Couples of these challenges are listed below:

High Rate of Return: ~% of the total online orders are replaced or returned in India and hence have to go through reverse logistics putting extra pressure on the logistic companies.

High Cost of Last Mile Delivery: Last-mile delivery remains to be the significant pain point in logistics.  ~% of the total logistic cost is spent on Last Mile Deliveries owing to poor transport infrastructure in the country.

Competition Overview

The E-commerce Logistics Industry of India is quite concentrated with presence of 10-12 major players in the market. Top 2 players namely E-Kart and ATS capture more than 60% market share. Companies in this space battle against each other to acquire and retain clients, expand geographical presence, expand service offering and improve unit economics to increase margins. Worth of Mouth and Reputation play an important role in expanding client base in this industry. Delivery Cost, Delivery Time, Network Coverage, Brand Value, Technology Stack, Success Rate are some of the competing parameters each company focuses upon to gain customer trust.

Future Outlook of E-Commerce Logistics Industry In India

The E-commerce Logistics Industry is expected to flourish in India with rising demand from Tier 2 and below cities (owing to higher internet penetration) and increasing consumer expectations for fast delivery services. This industry is expected to witness a CAGR of 23.6% in terms of revenue during the forecast period FY’2020-FY’2025F.

Ongoing technological disruptions such as Monitored Robots, Drones, Inbuilt RFID, GPS, IoT, telematics and more which help in tracking Inventory and deliver products on time will gain higher traction in future. Expansion of Fulfilment Centres in Tier 2 and below cities will increase to better serve the population in these areas by offering speedy delivery of all the products including large parcel sizes.

Key Target Audience:-

E-commerce Companies

Third Party Logistic Companies

Potential Market Entrants

E-Retailers

Time Period Captured in the Report:-

Historical Period – FY’2015-FY’2020

Forecast Period – FY’2020-FY’2025F

Companies Mentioned:-

ATS

E-Kart

Delhivery

Ecom Express

Bluedart

Xpressbees

DTDC-Dotzot

Shadowfax

Safeexpress

United Parcel Service

Gati

Go-Javas

DHL

Fedex

Aramex

For More Information on the research report, refer to below link:-

India E-Commerce Logistics Market

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Contact Us:-
Ken Research
Ankur Gupta, Head Marketing & Communications
Ankur@kenresearch.com
+91-9015378249

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