Case study on Indian Ecommerce logistics

A descriptive case study on Indian Ecommerce logistics market

1. CASE STUDY Indian E-Commerce Logistics Submitted by: TEAM IGNITING MINDS

2. Market Estimation: The Indian E-commerce Logistics market size is estimated to be approx. US$ 4B in FY’24. Indian e-commerce retail logistics market is expected to grow at a CAGR of 24% to reach US$ 6.3B in FY26 from US$ 2.2B in FY21. E-commerce logistics growth will be driven by the e-commerce retail market, which is expected to reach a size of approx. US$ 145B by FY26. MARKET OVERVIEW

3. Currently, about 40% of shipment volume is driven by the nation’s top 500 to 700 postal codes (PINs). The next 25 or 30 cities, so-called Tier 1 cities , consist of 1,500 to 2,000 PINs and account for about 20% of shipment volume. Tier 2 cities (5,000 to 6,000 PINs) and the remainder of the approximately 22,000 PINs in the country account for the remaining 40% of shipments . MARKET OVERVIEW Captive LSPs Cater to time-sensitive shipments, enabling more control over the supply chain. Ensure service levels as demanded by e-commerce players. Specialized LSPs Focusing on nuances of e-commerce deliveries like handling COD orders, return pickups, OTP confirmations etc. Cater to time sensitive deliveries, also providing cost effective options. Traditional LSPs Presence of delivery center and pickup centers across the country, preferred for placing orders offline. Service reliability is high as compared to new entrants. LSP consolidators Cost-effective way for small and medium players to transport goods since they have relatively lower volume. Provide additional services like handling payments, customer queries, tracking services, etc.

4. KEY BUSINESS DRIVERS IN E-COMMERCE L0GISTICS No. of Mobile phone internet users in India

5. First Mile Products are dispatched from the seller to the fulfilment centers/mother warehouses depending on the model type (inventory-based model or marketplace model). Processing Goods are sorted and processed according to the final destinations. Line Haul Line haul acts as the connecting link between the central supply center and the central demand center. This can be done via land or air, depending on distance and cost. Last Mile Last Mile refers to the shipping of the product from mother hubs to delivery hubs, where they are shipped out to the customers. COST STRUCTURE AND SUPPLY CHAIN IN E-COMMERCE L0GISTICS

6. Expansion of Network and Infrastructure: Establish new fulfillment centers, distribution hubs, and last-mile delivery facilities in strategic locations across the country. Data from Statista shows that the number of internet users in India is expected to reach 974 million by 2025. According to Tracxn, as of March 2024, e-commerce logistics companies in India have raised $2.13 billion in funding. Diversification of Services : Offering value-added services such as warehousing, inventory management, and reverse logistics. It will increase asset utilization and reduce overall cost by 10-15% (estimated). Parentship and Collaboration: Partner with e-commerce platforms to grab opportunity and with small “mom and pop” shops across Tier II and below cities for ordering and delivery of products. This will reduce waiting time for delivery by 20-30%(estimated). BUSINESS EXPANSION AND DIVERSIFICATION

7. Embracing advanced technology such as AI, machine learning, and IoT can optimize route planning, reduce delivery times, and enhance overall operational efficiency. Adopting sustainable solutions can ensure high market capture due to changing norms. According to a report by KPMG India and CII, investments in technology can potentially reduce logistics costs by up to 20-25%. Also, Delhivery invested in AI and robotics to streamline operations, leading to a reported 30% reduction in costs . CONTINUOUS INNOVATION AND TECHNOLOGY INTEGRATION

8. CUSTOMER-CENTRIC APPROACH Meeting Customer Expectations Considering Key Factors for Delivery. According to a survey by PwC, 73% of consumers say that a positive delivery experience encourages them to shop more frequently. Timely Delivery Timely Delivery is a crucial customer expectation, demanding efficient logistics operations and minimal delivery lead times. Real-time Tracking Customers expect real-time tracking to monitor the progress of their deliveries, ensuring transparency and reliability. Hassle-free Returns Providing hassle-free return processes enhances customer satisfaction and loyalty, influencing their overall delivery experience. Personalized Delivery Options Offering personalized delivery options, such as preferred delivery time slots, adds value to the customer experience, fostering brand loyalty.