E-com boom sets off a scramble for warehouses
MUMBAI: Explosive demand from e-commerce companies, including Flipkart, Amazon and Jiomart, has set off a scramble for warehousing space—so much so that malls, marriage halls, auditoriums and highstreet stalls that had shut down amid the pandemic are now being used for storage.
Last July, Amazon announced a 20% increase in its warehousing capacity to 60 fulfilment centres (FCS) in India, covering 32 million cu. ft across 15 states. It has also launched ‘receive centres’ that act as product collection points, where sellers ship their products for further distribution across the Amazon FC network. RIL’S Jiomart is also looking to invest in logistics and the supply chain.
“The biggest demand for warehousing is coming from e-commerce players with sameor next-day deliveries, and no-questions-asked returns, and omnichannel retail taking precedence. Companies focusing on last mile or express delivery such as grocery players like D’mart are using spare real estate like malls or their own retail stores as dark warehouses, to concentrate on two-four hours or same-day delivery to customers,” said Anshul Singhal, managing director, Welspun One Logistics Parks.
In February, Reliance Retail said it is building its own supply chain by converting its Reliance Market stores into fulfilment centres, to further the reach of its new commerce venture, Jiomart, and expedite deliveries.
“To enable new commerce expansion across cities, Reliance Market stores transitioned into fulfilment centres,” Reliance Retail said on January 22. Reliance Retail is a subsidiary of Reliance Industries.
Fulfilment centres are facilities that hold inventory, helping e-commerce companies complete customer orders. They can serve both business-to-business (B2B) and business-to-consumer orders (B2C).
“Prior to Covid, e-commerce and third-party logistic companies had an equal share in the demand for warehouses. But post-pandemic, e-commerce has taken a major share of nearly 45-50% of warehouse demand,” said Abhijit Verma, CEO, Avigna Space, a warehousing and logistics firm. The warehousing and logistics market, which began gaining impetus in the fourth quarter of last year, is expected to reach close to 35 million sq. ft of absorption this year, almost similar to 2019 levels, according to real estate research and advisory firm Jones Lang Lasalle.
Covid-19 has accelerated e-commerce adoption rates with an increase in UPI or unified payments interface-based transactions by 42% during the lockdown period.
Singhal said that as e-commerce and logistics companies look for consolidation of their warehouse footprint, they are choosing to migrate to Grade A facilities with scalability options so that they can expand their growing businesses.
The companies are also opting for large boxes for storage, with around 400,000-plus sq. ft being the average demand.
Additional warehousing demand drivers are third-party logistics and express logistics companies that are growing at a massive pace with a focus on tier-ii and tier-iii cities.
“When it comes to cold chain demand, with grocery players switching to e-commerces, there is an increased need, along with the rising e-pharma cold chain need,” added Singhal.
Cold chain logistics business is also booming, as demand from foodgrains, dairy, horticulture, poultry and pharmaceuticals business rises exponentially.