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Uncaged : Indian E-Commerce Logistics Industry

Find out more about the scope of growth in India's logistics industry and how it supported by the E-commerce industry.

Learn about the impact of Covid on the E-commerce logistics industry in India and the trends in the industry.

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Uncaged : Indian E-Commerce Logistics Industry

  1. 1. INDIAN E-COMMERCE LOGISTICS INDUSTRY
  2. 2. Table of Contents S/N TOPIC (A) Indian Logistics and E-Commerce: Overview & Growth Factors (B) Recent Trends and Developments (C) Industry Challenges (D) Key Players (E) Impact of Covid-19 on the industry
  3. 3. INDIAN LOGISTICS: OVERVIEW
  4. 4. 160 215 500 2018 2020 (E) 2025 (E) Overall Logistics Market Size (USD billion) 16% 18% Indian Logistics Industry: Overview Logistics industry is a crucial sector with a significant contribution to GDP and employment in India. 68 86 2019 2024 (E) Source: Niti Aayog Economic Survey 2017-18 14 % 10% For India: Share of Logistics Cost as a % of GDP 2018 2022 Target India’s Warehousing Space Requirement (Million Square Meter) 7% For developed countries - Share of Logistics Cost as a % of GDP
  5. 5. The automotive sector (components and finished vehicles) is the largest sector, however E-Commerce is fast becoming one of the main market segments for the logistics industry. Automotive Components, 26% Cars and UVs, 17% E-Commerce, 16% Two & Three Wheelers, 13% Organized Retail, 8% Consumer Durables & FMCG, 5% Logistics Market Share by Industry (2018) 16% 28% 2018 2025 Indian Logistics Industry: Overview Growth in Share of E-Commerce Logistics Among Total Logistics
  6. 6. Indian Logistics Industry: Overview Surface/ Road transport is the most common mode of transportation in logistics sector. 60% 31% 9% Road Rail Coastal Mode of Transportation (2018) Source: Ministry of Commerce 29% 15% 21% 16% 19% 36% 24% 21% 11% 8% 0% 10% 20% 30% 40% 3PL E-Commerce Manufacturing Retail Others Warehousing Market Share by Industry (2017-18) 2017 2018 Cost of Transportation INR 3.00/ton INR 1.5/ton INR 1.00/ton Warehousing Market Share by Industry (2017- 18)
  7. 7. Indian Logistics Industry: Overview Express logistics, which primarily caters to E-commerce logistics shipments, is expected to grow at a CAGR of 15-16% in the next five years. < 2 KGs, 50% 2-5 Kgs, 30% > 5 Kgs, 20% Consignment Distribution by Weight (2018) 2.8 9 0 5 10 2018 2025E Express Logistics Market Size (USD Billion) 15-16% Express delivery is the fastest form of shipping - the shipment will get transported to the customer anywhere between 24 to 72 hours.
  8. 8. ECOMMERCE INDUSTRY: OVERVIEW
  9. 9. E-Commerce Industry: Overview and Growth Factors Indian E-commerce Industry is dominated of two players who control 63% of the total market. 14 50 64 2014 2018 2020E Market Size (USD billion) Flipkart 32% Amazon 31% PayTm Mall 6% Myntra 5% Snapdeal 2% Others 24% Market Share (2018) Source: Economic times IndiaSource: Statista, ‘19 37% 13%
  10. 10. E-Commerce Industry: Overview and Growth Factors Indian E-commerce Growth is driven by increasing access to smartphones and internet penetration. 0.3 1.2 8.3 9.9 15.1 India Indonesia Japan China South Korea Cost Per GB of Data in 2019 (USD) 295 437 483 525 252 299 340 374 2016 2017 2018 2019 Number of Internet and Smartphone Users (Million Internet Users Smartphone Users Source: Statista, ‘19 Source: Statista, ‘19 Smartphone penetration in India 26% (2018) (2022E) 36% Internet Pricing Trend in India 93% Reduction INR 269/GB (USD 3.78/GB) (2014) INR 18.54/GB (USD 0.26/GB) (2019) 21% 14%
  11. 11. ECOMMERCE LOGISTICS: OVERVIEW & GROWTH DRIVERS
  12. 12. E-Commerce Logistics: Overview and Growth Factors Metro Cities, 50% Tier I, 12% Tier II and Below, 38% Market Share of E-Commerce Logistics: By City-type* (2018) As of 2018, Metro and Tier 1 cities account for more than half of the business in E-Commerce logistics industry by number of shipments. Source: IBEF 2% 3% 8% 9% 29% 48% 0% 20% 40% 60% Others Books Personal Care & Baby Products Home Furnishing Apparel Electronics E-commerce Sales Share: By Value of Product Categories (2018) *Metro City: More than 1 Million Population, Tier I City: More than 100,000 Population, Tier II and Below: Population less than 100000 (1 Million Shipments / day)
  13. 13. E-Commerce Logistics: Overview and Growth Factors As of 2018, Metro and Tier 1 cities account for more than half of the business in E-Commerce logistics industry by number of shipments. 2% 3% 8% 9% 29% 48% 0% 20% 40% 60% Others Books Personal Care & Baby Products Home Furnishing Apparel Electronics E-commerce Sales Share: By Value of Product Categories (2018) *Metro City: More than 1 Million Population, Tier I City: More than 100,000 Population, Tier II and Below: Population less than 100000 Metro Cities, 50% Tier I, 12% Tier II and Below, 38% Market Share of E-Commerce Logistics: By City-type* (2018) Source: IBEF (1 Million Shipments / day)
  14. 14. E Commerce Logistics: Value Chain of Delivery E-Commerce players are facing the biggest cost challenge from last mile delivery of the product which accounts for approximately 50% of total logistics cost. 8% 2% 43% 47% Cost Break-up by Logistics Activities (2018) First Mile Processing Line Haul Last Mile
  15. 15. RECENT TRENDS & DEVELOPMENT
  16. 16. Recent Trends and Developments Reduced Transit Time Reduction in paperwork, draft e-way bill only Consolidation of warehouses Source: IBEF Implementation of GST Tax in India since July 2017 had a positive effect on E-Commerce logistics Industry as it eased the movement of goods between state borders. “E-Way Bill is an Electronic Way bill for movement of goods to be generated on the E-Way Bill Portal. A GST registered person, transporting goods worth INR50000 (USD674) and above, in a vehicle has to generate an e-way bill on ewaybillgst.gov.in.” In 2018, Indian government amended E-Commerce regulations: FDI in subsidiaries of E-Commerce companies was capped at 25% in inventory based model and allowed 100% for market place model. Increased demand for office, warehousing, logistic spaces Volume of deliveries expected to expand. 100% FDI is allowed in warehousing sector will reduce the overall logistics cost due to better supply chain management. Granting of status of “Infrastructure” to logistics sector, in 2017.
  17. 17. Solving Last Mile Delivery challenge Partner Department Store Order placed at the store using mobile of shop partner Information reaches at warehouse Order Dispatched to Store Partner Order Collected by customer from shop Delivery Model in Partnership with Mom and Pop Stores Number of Stores (2019) Number of CitiesKey E-Commerce Companies 20000 27000 9000 700 700 50 Delivery Network of major E-Commerce Companies Captive arms of E-Commerce companies have come with some new delivery models such as partnering with small mom and pop shops across Tier II and below cities for ordering and delivery of products.
  18. 18. INDUSTRY CHALLENGES
  19. 19. Industry Challenges 30% 70% Returned Accepted 23% 22% 20% 35% Wrong Item Received Product Not Matching Damaged Product Others* Product returns is the biggest challenge faced by logistics industry as its cost exceeds the delivery cost. Dispatch Final Delivery Product ReturnTo Warehouse Cost of Logistics (2019) Apprx INR145 (USD2.00) Return Rate of Shipments (2018) Key Reasons For Return (2018) INR65 (USD 0.88) Average Cost of Shipment to end customer: INR75 (USD 1.01) Cost of return shipment
  20. 20. Industry Challenges Cash on Delivery (CoD) is the most preferred mode of payment by online shoppers in India. Cash on Delivery Orders Prepaid Orders Mode of Payment (2019) Metro & Tier 1 38% Tier II & Below 62% Share of CoD (2018) Source: Spire Estimates (2019) Source: Spire Estimates (2018) 60-75% 25-40% Logistics companies have to develop capabilities to collect cash from the delivery point and manage the transactions. This has additional cost implications on them. According to Amazon and Flipkart prepaid orders have lower proportion / probability of return in comparison to cash on delivery orders Challenges with CoD: Value limitation on purchases using CoD. Steps taken by companies to improve the situation: 20,000 50,000 50,000 INR INR INR (USD270) (USD674)(USD674) Training of last mile delivery staff to process payments using cards at the delivery sites or collection centers.
  21. 21. ECOMMERCE LOGISTICS: KEY PLAYERS
  22. 22. Overview of E-Commerce Logistics Players E-Commerce players have developed captive logistics arms for managing delivery of their shipments. These captive arms have the highest market share in E-Commerce logistics industry. Captive Logistics Arms, 49% E-Commerce Focussed Players, 28% Traditional Players, 23% Type of Logistics Provider (2018) 620.2 237.7 141.1 292.0 Ekart Delhivery Ecom Express Amazon Revenue in USD Million (2019) Source: Ministry of Commerce Top four companies in terms of shipments managed and revenue are: E-Commerce Logistics Shipments (2018) 57 million shipments /month Most of these Shipments (~49%) are managed by the captive arms of E- Commerce Players.
  23. 23. IMPACT OF COVID-19 ON E-COMMERCE LOGISTICS IN INDIA
  24. 24. Impact Of Covid-19 On E-Commerce Logistics In India The outbreak of the pandemic has proven to be a boon for the E-Commerce industry in India where logistics is primarily focused on retail consumers. Consumers are avoiding crowded marketplaces and are leaving their houses a lot less. Big Indian MNCs investing in small E-Com platforms Logistic platforms are opting more stringent guidelines for slotted and same day deliveries to fulfill the increased demand of essential material. Daily delivery orders have doubled for essential items focused E-Com platforms. Logistics focusing on making touchless deliveries. Hyperlocal delivery - ensure deliveries in 2,3 or 4 hours to customer’s doorsteps, at a cost that is viable to the retailer.
  25. 25. SPIRE INDIA SOLUTIONS
  26. 26. SPIRE INDIA SOLUTIONS Business Ecosystem Channels Competitors Country Environment Customers Government Opinion Leaders Substitutes Suppliers
  27. 27. THANK YOU!

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