This report includes a comprehensive assessment of Indian online e-logistics sector performance across five key dimensions

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2011 RedSeer Consulting Confidential `and Proprietary Information
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www.redseerconsulting.com Query@redseerconsulting.com
2017 RedSeer Consulting Confidential `and Proprietary Information
©
Flexible in Approach, Firm on Results
Flexible in Approach, Firm on Results
Q1-CY17 Edition
State of E-logistics in India
• A comprehensive performance review of the E-commerce logistics sector
• Assessed through a regularly tracked set of performance indicators
• Published quarterly
1
Published in May 2017

2. |
What is in this report?
2
1. This report includes a comprehensive assessment of Indian online
e-logistics sector performance across five key dimensions
2. Each key dimension is rated on whether the sector performed
above expectations (Bullish ), broadly as per expectation
(Neutral ) or significantly worse than expectations (Bearish )
on that dimension
3. Each key dimension is further built up from multiple sub-
dimensions, which are also rated for the sector using the above
criteria
RedSeer’s Integrated Research ApproachTM incorporating the following:
1. Mystery shopping on 20,000+ items every year
2. Expert interviews on E-logistics industry providing comprehensive
coverage of captive logistics of e-tailers (eKart, ATS), New Age 3PLs
(Delhivery, Ecom Express) and traditional 3PLs (Blue Dart, GATI)
Sector Assessment Approach
Integrated Research ApproachTM
Research Methodology

3. |
SN Key Dimension Sub-Dimensions
1 Shipment Performance
1. Overall Industry Level Volume Performance
2. Captive Vs 3PL Performance
3. Forward & Reverse Volume Performance
2 Clientele Diversification
1. Share of Large Shipments
2. Share of Hyperlocal Shipments
3. Shipment Share of long tail clients
4. Shipment Share of non-ecommerce in New Age 3PLs
3 Infrastructure Backbone
1. FC count and Capacity Utilization
2. DC count and Capacity Utilization
4 Delivery Excellence
1. Delivery Reliability (Local)
2. Delivery Reliability (Zonal)
3. Delivery Reliability (Local)
5 Unit Economics
1. Share of Surface Shipments
2. Share of COD Shipments
3. Share of Shipments served through alternative modes of delivery (ADM)
4. Cost per shipment
5. 3PL Revenue
Overall Performance
Five Key Dimensions for Assessing Sector Performance
3

4. |
Glossary
4
Key Word Description
RTO Return to Origin- Shipments which are returned without being delivered to
end customer (includes post-shipment cancellations)
RVP Reverse Pick Ups- Shipments which are returned by customers post delivery
COD Cash on delivery
ADM
Alternative modes of Delivery, like Amazon utilizing Kirana stores to provide
last mile services
Delivery
Reliability
Difference in delivery speed between the fastest and the slowest logistic player
Glossary
Note
1. The report broadly covers the trends in E-logistics B2C market in Q1 CY17
2. Trends in the online B2B logistics market are not covered in this report
3. Trends in the offline logistics market (both B2B and B2C) are also not covered in this report

5. |
Big-5 E-tailers Hyperlocal Long-tail Clientele
0%
100%
Q1'16 Q2 Q3 Q4 Q1'17
COD Surface Shipments
Executive Summary
5
 Q1-CY17 saw the industry return to Q1-CY16 level in terms of
shipments
 The industry experienced a slump from Q4-CY16, primarily due
to post festive slowdown in e-tailing industry
 E-logistics industry continued to diversify itself in terms of type
of shipments, end users and clientele. Hyperlocal shipments
increased by 500 BPS from Q1-CY16 while share of long-tail
clientele increased by 700 BPS
 E-logistics industry continued to invest in expanding their
infrastructure despite lower than expected capacity utilization
 Stagnation in e-tailing industry coupled with increased
dominance of captive logistics reduced the potential 3PL market
 On the positive side, stagnation forced e-logistics players to
improve their unit economics through increasing share of
surface shipping and experimenting with ADMs
Overall, Q1-CY17 followed the cyclical nature of industry and returned to levels seen in Q1-CY16. Although
shipments volume and 3PL revenue reduced, e-logistics companies further diversified their portfolio and
improved their unit economics
1.8%
Q1’16 Q1’17
Shipment Profile (in Mn)
Cost Optimization Trends
State of the E-logistics Market Q1-CY17- Executive Summary
164 161

6. |
Sector Assessment Scorecard: Q1-CY17 Performance
6
SN Key Dimension
Industry
Performance
Assessment Rationale
1
Shipment
Performance
• After two successive quarters of growth, the Indian E-logistics market experienced a
slowdown in Q1-CY17
• E-logistics slowdown mirrors the stagnating trend seen in Indian e-tailing market
• E-tailing driven logistics stagnation has affected both forward and reverse shipments;
increasing share of captive orders has further hurt 3PLs
2
Clientele
Diversification
• 3PLs have responded by diversifying into new segments; large shipments are on an
upswing despite a hiccup in Q1-17 while hyperlocal continues to grow
• 3PLs have also been able to grow the share of long tail clients and increase their non-
ecommerce business
3
Infrastructure
Backbone
• Despite industry stagnation, e-logistics players have continue to build FCs- which has
resulted in failing capacity utilization
• Last mile DCs have also been growing for industry- but again with falling capacity
utilization
4
Delivery
Excellence
• Growth in FC and DC network for industry has had limited impact on the delivery
reliability of the industry
5
Unit
Economics
• However, growing FC count has helped to increase % of (low cost) surface shipments;
industry has also performed well on other key cost levers
• Better management of cost drivers has helped industry bring down its CPS steadily;
however revenue has been stagnant
6
Overall Sector
Performance
• Overall, the past quarter largely suffered from post festive quarter slump and
stagnation in e-tailing industry has forced companies to venture out of e-
commerce industry
Bearish
Bullish Neutral

7. |
164
151 155
179
161
Q1 CY16 Q2 CY16 Q3 CY16 Q4 CY16 Q1 CY17
7
Source: RedSeer analysis
 Government
regulations led to e-
tailers moving their
focus away from
improving sales
 Quarter was spent in
tackling these
regulations
 Quarter was relatively
stable with e-logistics
players still coping
from new regulations
 End of Quarter 2 saw
first big sales event in
2016
 Return of sales events
in July and August saw
increase in shipments
 Hyperlocal continue to
improve quarter on
quarter
• Festive sales held in
October and overall
strong performance in
Q4 from e-tailing sector
ushered in growth
• Demonetization
significantly boosted
hyperlocal shipments
 Decline in shipments
post Q4 is due to non-
festive period
 In spite of the decline,
the overall shipments
were almost equal in
numbers to Q1 CY’16
After two successive quarters of growth, the Indian E-logistics market
experienced a slowdown in Q1-CY17
Indian E-logistics Market- Shipments Count in Millions
E-tailing, hyperlocal & reverse shipments for 3PLs & Captive
Shipment Performance
~2%

8. |
14,0
13,0 13,5
17,0
14,7
Q1 CY16 Q2 CY16 Q3 CY16 Q4 CY16 Q1 CY17
Indian E-Tailing Market- Gross GMV Annualized Run-Rate
(For Each Quarter, In USD Bn )
5%
8
Source: RedSeer analysis
E-logistics slowdown mirrors the stagnating trend seen in Indian e-tailing
market
Shipment Performance

9. |
0
200
Q1'16 Q2 Q3 Q4 Q1'17
Forward Reverse
9
E-tailing driven logistics stagnation has affected both forward and reverse
shipments; increasing share of captive orders has further hurt 3PLs
Source: RedSeer analysis Bearish
Bullish Neutral
Decrease in # of shipments
served through 3PLs
• Major e-tailers have started
focusing more on their captive
logistics to have a better
operational control on delivery
experience
• Leading players like FK and AZ
are delivering only 15-20%
shipments through 3PLs
Forward volume has reduced by a
greater extent than reverse
shipments
• Forward volume reduced due to
decline in e-tailing orders which
were placed in Q1 CY’17
Shipment Performance
0%
100%
Q1'16 Q2 Q3 Q4 Q1'17
Captive 3PL
Forward
Vs
Reverse
Volume
Performance
(in Mn)
1
Captive Vs 3PL
Volume
Performance
(as % forward
shipments)
2
Sub-Dimension Key Takeaways
Time Trend
Sub-Dimension
Rating: Q1-CY17

10. | 10
3PLs have responded by diversifying into new segments; large shipments are
on an upswing despite a hiccup in Q1-17 while hyperlocal continues to grow
Source: RedSeer analysis Bearish
Bullish Neutral
Sub-Dimension Key Takeaways
Time Trend
Sub-Dimension
Rating: Q1-CY17
0%
20%
Q1'16 Q2 Q3 Q4 Q1'17
Share of large shipments in Q1
CY’17 have reduced from Q4’16
but its share is better than Q1’16
• Lack of offers on large
appliances, a typical feature of
festive sales in Q4 led to decline
in share of large shipments
• However, despite the decrease,
overall large shipment share is
expected to grow further
Share of Large
shipments
(in %)
1
0%
20%
Q1'16 Q2 Q3 Q4 Q1'17
Hyperlocal shipments grew by
~35% in Q1-CY117 over previous
quarter primarily due to higher
adoption of online food delivery
services
• Although, number of orders per
customer has declined by 15% in
Q1-CY17, influx of new customers
has offset the decline
Share of Hyperlocal
Shipments
(in %)
2
Clientele Diversification

11. | 11
3PLs have also been able to grow the share of long tail clients and increase
their non-ecommerce business
Source: RedSeer analysis Bearish
Bullish Neutral
Sub-Dimension Key Takeaways
Time Trend
Sub-Dimension
Rating: Q1-CY17
0%
50%
Q1'16 Q2 Q3 Q4 Q1'17
With more long tail clients, New
Age 3PLs’ dependence on big e-
tailers have started to reduce
• Diversified clientele nullifies
increased cost pressure faced in
case of consolidated client base
• For example,~45% of Delhivery’s
shipments are contributed by
diverse clients such as Myntra,
Jabong, Zivame, W for Women,
Lime road among others
Shipment share of
long tail clients
(in %)
3
0%
20%
Q1'16 Q2 Q3 Q4 Q1'17
New Age 3PLs are moving
towards alternative modes of
revenue
• New age 3PLs are experimenting
with serving traditional markets
such as couriers and offline B2B
• For example, 10-15% of
Delhivery’s shipments and ~40%
of Xpressbees’ shipments come
from non-ecommerce (Q1’17)
Shipment Share of
non-ecommerce in
New Age 3PLs
(in %)
4
Clientele Diversification

12. |
Despite industry stagnation, e-logistics players have continue to build FCs-
which has resulted in failing capacity utilization
0%
100%
Q1'16 Q2 Q3 Q4 Q1'17
Captive
New Age 3PL
0
120
Q1'16 Q2 Q3 Q4 Q1'17
Captive
New Age 3PL
Traditional
12
Source: RedSeer analysis
Overcapacity in warehousing
along with stagnating demand
has led to falling utilization of
around 55%
• Expansion of warehouses has
also taken place in low demand
regions has led to lower utilization
• Low demand of large shipments in
e-tailing sector has also led to
decreasing utilization in dedicated
warehouses pulling down the
industry average
There has been steady expansion
in number of FCs with e-logistics
players
 Most of the warehouses being
established are relatively smaller
in size and spread across the
country
 Additionally, establishing
dedicated warehouses for large
appliances and furniture has been
the focus of the industry
Bearish
Bullish Neutral
Sub-Dimension Key Takeaways
Time Trend
Sub-Dimension
Rating: Q1-CY17
FC Count
(#)
1
FC Capacity
Utilization
(in %)
2
Infrastructure Backbone

13. |
Last mile DCs have also been growing for industry- but again with falling
capacity utilization
0%
100%
Q1'16 Q2 Q3 Q4 Q1'17
Captive
New Age 3PL
0
5000
Q1'16 Q2 Q3 Q4 Q1'17
Captive
New Age 3PL
Traditional
13
Source: RedSeer analysis
Increasing DC footprint has led to
overcapacity and low utilization
• % utilization in Metros and Tier 1
cities have steadily increased
• However, increasing Tier 2+ DC
count has offset that increase as
they operate much lower than
overall average
There has been a steady
expansion in number of DCs with
e-logistics players
 Most the DC expansion has taken
place in Tier 2+ cities which are
expected to contribute bulk of
e-tailing orders in future
 Certain captive logistics are
expanding in East zone where
ADM deliveries have failed to pick
up pace
Bearish
Bullish Neutral
Sub-Dimension Key Takeaways
Time Trend
Sub-Dimension
Rating: Q1-CY17
DC Count
(#)
3
DC Capacity
Utilization
(in %)
4
Infrastructure Backbone

14. |
0
4
Q1'16 Q2 Q3 Q4 Q1'17
0
3
Q1'16 Q2 Q3 Q4 Q1'17
14
Growth in FC and DC network for industry has had limited impact on the
delivery reliability of the industry
Source: RedSeer analysis
0
4
Q1'16 Q2 Q3 Q4 Q1'17
Delivery reliability has stabilized in
past two quarters for national
orders
 Delivery reliability has increased as
certain logistic players have
switched to surface shipping while
others are still carrying air shipping
Bearish
Bullish Neutral
Sub-Dimension Key Takeaways
Time Trend
Sub-Dimension
Rating: Q1-CY17
Delivery Reliability-
National
(in days)
3
Delivery Performance
Difference between fastest and
slowest player has decreased
significantly in past year
 Increase in number of DCs has
allowed to decrease time spent in
last mile, the major component for
local shipments
Delivery Reliability1-
Local
(in days)
1
Delivery reliability has seen
fluctuations for intra-zonal
deliveries
 Warehouse expansion across
zones has increased delivery
speed for zonal shipments-as
distance travelled by shipments has
decreased
Delivery Reliability-
Zonal
(in days)
2
Note: 1. Delivery Reliability is the difference in delivery speed between the fastest and the slowest logistic player

15. |
50%
100%
Q1'16 Q2 Q3 Q4 Q1'17
15
However, growing FC count has helped to increase % of (low cost) surface
shipments; industry has also performed well on other key cost levers
Source: RedSeer analysis
0%
20%
Q1'16 Q2 Q3 Q4 Q1'17
Increased dependence on Kirana
stores and other local stores are
being used for last mile delivery
 Pioneered by Amazon, use of local
shops’ workforce for last mile
delivery for nominal fees has
helped in improved delivery
performance and reduced costs
Bearish
Bullish Neutral
Sub-Dimension Key Takeaways
Time Trend
Sub-Dimension
Rating: Q1-CY17
Shipments served
through alternative
modes of delivery
(ADM)
(in%)
3
Increase in share of local/intra-
zonal shipments has increased
share of surface shipments Q-o-Q
 Widespread FC footprint has
helped reduce the distance
travelled by a shipment
 Surface shipping can now provide
same shipping speed
Share of Surface
Shipments
(in% Forward
shipments)
1
COD share of orders has been
relatively stable for the past year
 Growing confidence among
consumers in e-tailing is primary
reason for slight decline in COD
share
 Demonetization did not have a long
term impact on the industry
Share of COD
Shipments
(in%)
2
0%
100%
Q1'16 Q2 Q3 Q4 Q1'17
Unit Economics

16. |
1,0
3,0
Q1'16 Q2 Q3 Q4 Q1'17
Captive 3PL
16
Better management of cost drivers has helped industry bring down its CPS
steadily; however revenue has been stagnant
Source: RedSeer analysis
0
150
Q1'16 Q2 Q3 Q4 Q1'17
As a result of increasing regional
utilization, lower COD and
greater share of ADM deliveries,
CPS has fallen for the industry
 Moving forward, more logistic
companies will try to utilize ADMs
to reduce costs
 New Age 3PLs have been better
at reducing cost compared to
traditional 3PLs
While revenue per shipment has
remained broadly stable y-o-y,
3PL’s revenues have fallen due to
lower share of e-tailing orders
due to captives expansion
 Other revenue sources like
hyperlocal and non-ecommerce
are yet to contribute meaningfully
to revenues
 Decline in revenue has affected
both New Age and traditional
3PLs equally
Bearish
Bullish Neutral
CPS1= Cost per
shipment for
logistics
(in USD)
4
3PL Revenues
(in USD Mn)
5
Sub-Dimension Key Takeaways
Time Trend
Sub-Dimension
Rating: Q1-CY17
Unit Economics
Note: 1. Cost includes both forward and reverse logistic costs along with shipment processing cost at warehouses and delivery centers

17. |
www.redseerconsulting.com Query@redseerconsulting.com
2017 RedSeer Consulting Confidential and Proprietary Information
©
Flexible in Approach, Firm on Results
Thank You !
query@redseerconsulting.com
17
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