 "How start-ups are rushing to cash in on India’s $300 bn logistics industry")
A shopper in India can sign on to an e-commerce site and buy a product with the click of a button. How much does that click cost the store?
According to Indian consulting firm Technopak, India’s e-commerce start-ups spend as much as 30% of their net income on logistics. In the US, Amazon is reported to spend 11.7%. On Alibaba’s marketplaces, the cost is entirely paid for by merchants and buyers.
Flipkart and Snapdeal, two of India’s largest e-commerce companies, spend so much money on logistics that they don’t expect to be profitable for the next few years.
For T.A. Krishnan, founder of Ecom Express, a well-funded logistics start-up, logistical planning is too big of a challenge for a company to handle alone.
“Outsourcing your strategy to a logistics company means that you can focus on your product,” he explains. “The challenge of logistics is difficult and needs to be handled by a dedicated player. Things like regulatory frameworks, airports, road networks, highways are all hindrances to growth in India. These are huge challenges that need to be tackled by a smart solution.”
This “smart solution,” for India’s booming logistics industry – $300 billion by 2020 and 14% of the country’s current GDP – can mean several different things.
“Conventional logistics solutions don’t work anymore in India,” explains Sahil Barua, CEO of Delhivery, an e-commerce logistics service. “The old world of things like mail cargo and strictly B2B solutions are not flexible enough to fit a customer’s demands.”
