eRetail gives boost to logistics

With ongoing trends for online shopping and an ever-increasing demand for quick delivery of products, most of the leading logistics companies have announced dedicated logistics units to cater to ecommerce firms.

Seeing the rapid growth in the Indian online-shopping industry, logistics firms are set to embark on a series of activities, including capital-raising, to make the most of it.

Recently, the logistics major DHL announced an investment of as much as ` 800 crore in the next two years to gear up for growth in the e-commerce sector. Smaller players have also announced similar measures. Delhivery has entered into two rounds of fund-raising while a third-round, worth ` 175 crore, was being discussed while Holisol recently raised US$ 5 million via a privateequity placement.

Several other players, such as Ecom Express have recently made news for announcing a series of fund-raising issues.

The effects of the high growth in the ecommerce industry, whose sales have increased from US$ 2.5 billion in 2009 to US$ 13 billion in 2013 – though much of it came through online travel-booking websites – is already showing up in the financials of some firms.

But even as the opportunity served up by ecommerce websites beckons, the challenges presented by India’s creaky infrastructure to both the logistics firms as

well the websites who use their networks are daunting.

A report recently discussed these challenges of parcels flipped out mid-way, cash-on-delivery orders returned as well as the high rush for and costs involved with air mail – as road and rail networks continue to remain untrustworthy.

To counter that, several leading ecommerce websites, such as Flipkart, Amazon and eBay, have resorted to setting up their own logistics units.

According to a PwCASSOCHAM report, the ecommerce industry will spend a total of US$ 1.9 billion by 2019 towards logistics.

The study pegged the size of Indian e-retail industry at US$100 billion by 2020.