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.

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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.

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