Overview of eCommerce Logistics Market in India
The e-commerce logistics market is one of the main driving forces behind the online retail industry, helping a multitude of industries fulfill orders to customers across the country. Our current e-commerce market is flooded with nearly 100 million online shoppers. That’s 100 followed by six more 0’s, a massive customer base for a variety of e-commerce companies and their logistics partners to cater to.
Research shows that in 2018, nearly 22 million people were employed in the logistics industry, and 16% of the entire industry's revenue came from the eCommerce Logistics sector. The latter number is set to jump to 28% by 2025. With such a huge portion of our country benefiting from the eCommerce logistics sector, we thought it would be interesting to run through the history of how this sector started and grew, and what are the challenges faced by it today.
History of eCommerce Logistics in India
The logistics industry as a whole began to pick up only after the 1970’s. Till that point, retailers would directly interact with supplies and wholesalers to fulfill deliveries. It was only in the 1980’s that stores began to create controlled and centralised distribution centres to handle deliveries. The next decade, the 1990’s, brought with it globalization which resulted in most retailers relying on global sources and an increase in imports led to a greater number of distribution centres to supply stores.
It was finally in the early years of the 21st century that eCommerce made its way to India, with internet-only eCommerce businesses (known as pure-play retailers) pushing the e-commerce logistics market forward by establishing e-fulfilment centres. This also drove more pre-existing logistics players to expand their scope of services to fulfill ecommerce needs.
By the 2nd decade of the 21st century, the ecommerce logistics industry grew exponentially to what it is today, a network of supply chain management companies that utilise technology to integrate with eCommerce businesses and streamline the many stages of delivery and fulfillment, from inventory management to storage, order manifestation and last-mile delivery.
What are the Major Challenges in the E-Commerce Logistics Market
While the ecommerce logistics industry has made leaps and bounds when it comes to progress, the battle is not yet won. In the words of the great George Bernard Shaw, “Science never solves a problem without creating 10 more.” These words ring true for the eCommerce logistics industry, an updated version of an older establishment that caters to a much wider range of customers and connects businesses all over the country with shoppers far and wide.
Though eCommerce has revolutionized the shopping experience for customers across the country, it requires specifications and expansions that the logistics sector of the industry has to adapt to. Keeping in mind the progress made, here are 3 of the major challenges faced by the e-commerce logistics industry.
1) High RTOs and Returns
One of the biggest problems faced by eCommerce logistics partners is a high volume of RTO (return-to-origin) orders, which occurs when an order is cancelled by a customer after pickup but prior to last-mile delivery, or when the delivery fails despite multiple attempts.
A majority of these cases occur due to miscommunication and information errors like customers accidentally providing incorrect addresses or contact information during order checkout. Creating a stronger system for dealing with such cases can help logistics companies convert incidental failed deliveries into successful deliveries.
2) Slow Infrastructure development
Numerous logistics companies have been attempting to improve their distribution network through a larger number of offices, hub and dispatch centres and transportation services. However, the development of this infrastructure for both ground and air shipments remains extremely slow.
The number of operational eCommerce businesses and volume of orders serviced by them continues to grow at a rate that most eCommerce logistics companies can’t keep up with. This adds to issues like delayed deliveries, slow customer communications and high RTOs.
3) High Costs
Between infrastructural inefficiencies and high volumes of RTOs, a huge burden is placed on the eCommerce logistics market to compete with the logistics industry in developed nations like Japan and the US. This essentially results in India’s eCommerce logistics industry bearing high costs for infrastructure development and fulfillment, and eCommerce businesses paying high delivery costs. This adds to the difficulties of air and ground transportation of shipments.
Related Post:- 7 Proven Ways to Reduce eCommerce Logistics Costs
Final Concluding Note
The eCommerce logistics market in India has witnessed a rapid growth of business and technology over the past half a century. While the industry faces major challenges in terms of infrastructure, costs and high RTOs and cancellations, they have expanded alongside eCommerce to provide faster and more efficient solutions.
Many courier services companies in India have taken up different specialized services and integrated more developed technologies to optimize delivery. Though many improvements are still in the works, India’s eCommerce logistics industry is among the fastest-growing logistics markets in the world.