How Indian Logistics Players Are Ramping Up Tech & Infra To Manage The Festive Season Sales Rush

After two-pandemic stricken years which resulted in subdued ecommerce sales, this is the first festive season without Covid-19 restrictions and a panic-ridden atmosphere. With optimism around demand upsurge during the upcoming ecommerce festive sales, logistics startups are gearing up to rise up to the challenge with measures such as getting warehouses ready, more focus on automation, and enabling digitisation.

A recent survey by TradeDesk revealed that 68% of Indians are excited about the upcoming festive season sales, an increase from 59% last year. More importantly, two in three shoppers intend to spend as much or more this festive season compared to the last festive season. Besides, nearly 40% of consumers plan to start shopping in mid-October or earlier.

India’s ecommerce market, which currently has 165 Mn online shoppers, is expected to have 350 Mn online shoppers by 2025, as per Inc42’s latest ‘The State Of Ecommerce Q3 2022, Infocus: D2C’ report.

According to the report, the ecommerce sector continues to be one of the top three funded sectors with the highest number of unicorns. It boasts of 23 unicorns, 14 soonicorns and more than 682 unique funded startups. India’s ecommerce market is estimated to provide a market opportunity of $400 Bn by 2030.

With a year-on-year (YoY) growth of 63% in ecommerce funding in Q2 2022, D2C has emerged as the most sought sub-sector from an investment point of view. With 50K+ digital first brands eyeing a total addressable market size of $300 Bn by 2030, the festive season is expected to see these brands pushing hard for higher sales numbers.

According to an Inc42 survey, a majority of D2C brands prefer to sell on more than five online ecommerce marketplaces to increase their reach as well as sales.

The survey also revealed that Indian D2C brands spent more than $157 Mn on advertising and around $40 Mn on logistics in FY21. Also, there was a 42% year-on-year surge in aggregate logistics expenditure between FY20 & FY21.

The logistics partners are one of the most crucial ecommerce enablers for the ecommerce sector in India. Ahead of the festive season, Inc42 talked to some of the key industry leaders to understand the planning and preparations of India’s logistics sector to fulfil the shipping demand in a seamless manner.

Getting Physical Infra Ready For Upsurge In Shipping

Most of the festive shopping begins close to the festivals when ecommerce companies, like Flipkart and Amazon, start their discount sales. However, Xpressbees CBO Harshal Bhoi highlighted that the preparations for the festive season start much ahead, probably around six months in advance, with physical infrastructure playing a key role in the entire process.

For instance, in line with market expectations, Xpressbees is increasing the capacities and the footprints of warehouses to reduce the overall time for delivery. The logistics startup is aiming to achieve this by adding warehouses near major consumption points, effectively following the dark stores model.

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Locus, a startup for end to end logistics solutions for last mile delivery, is also getting warehouse ready to meet the massive influx of orders through its Dispatch Management Platform, its founder and CEO Nishith Rastogi told Inc42. The platform helps to scale up efficiencies through automation and helps in managing everything for the orders – from capturing an order to its final delivery to helping manage any returns or rescheduling missed deliveries. Each order can be optimised and tracked in real-time.

To cope with the large volume of orders during the festive season, Locus’ Dispatch Management Platform also comes with carrier management features which allow businesses to quickly ramp up their fleet capacity with the help of trusted third-party logistics providers at competitive rates.

“To plan and align physical infrastructure such as warehouse or delivery centres’ space for partners, material handling resources, IT assets and devices, IT hardware scalability to manage peak volumes, manpower, vehicle, variable capacities of partners…are planned well in advance and monitored on a weekly basis based upon real-time demand and is adjusted accordingly,” Bhoi added.

More Focus On Tech For Seamless Delivery

As customers are looking for more transparency during delivery, logistics startups are increasing their focus on technologies that make the process more customer-centric. For instance, Xpressbees has made the entire delivery process paperless, enabled event-based messages to keep customers informed about delivery events and real-time visibility of shipments. Besides, it is using geolocation for accuracy to reduce discrepancies in address details, automated route-based sorting, among others.

“The consumer has now become part of the overall supply chain pulling products and services to the home. As a result, expectations around the delivery experience are now directly linked to brand experiences getting replaced from retail stores to the home. From the moment they place an order, consumers must have a seamless delivery experience,” Locus’ Rastogi added.

Once the order is ready to be shipped, Locus’ Route Planning module takes into account real-world constraints such as the size of the vehicle, fuel consumption, service level agreements, and road restrictions on certain vehicles to find optimal routes that maximise the number of on-time deliveries, he explained.

Zaiba Sarang, cofounder of iThink Logistics, said that there is a clear need for simplicity and transparency for every growing commercial business, including ecommerce. With the help of its deep-focused machine learning, iThink Logistics claims to bring transparency on issues like stress locations, and anomalies in shipment journey. It is also helping iThink Logistics to tackle other issues such as real-time shift demand to the right logistics.

“Along with helping our ecommerce tribe avoid late deliveries, we also help them keep better logistics performance by making sure they don’t have too many shipments in transit, which could hurt their performance, cost them money, and hurt the brand experience,” Sarang noted.

Sustainability Catching Attention Gradually

As more industries are increasingly focussing on sustainability, logistics firms are also gradually taking steps in that direction by taking sustainable initiatives across their networks.

For instance, Locus is deeply invested in improving the sustainable growth of last-mile operations. Rastogi claimed. The company is bringing several new features, which add to substantial savings on costs as well as fuel and maintenance, and lower carbon emissions from operations.

“Locus has helped its customers execute more than 650 Mn deliveries across 400 cities, saving more than 43 Mn miles, $200 Mn in logistics costs, and 18 Mn tons in greenhouse gas emissions (GHGs). That’s sequestering GHGs equivalent to 20K acres of forest cover,” Rastogi added.

iThink Logistics’ Sarang also added that green technology will play a crucial role in this journey. It is launching products that help e-commerce brands store their products near their customers, have delightful experiences for their customers, and increase their mobility with the least possible carbon footprint.

Logistics In India: Trends and Opportunity Ahead

According to Inc42’s August 2022 report on “The State Of Indian Startup Ecosystem”, the overall intercity road logistics market in India is poised to be worth $299 Bn by 2025. Around 63% of the total demand is poised to be from on-demand intercity logistics, where the requirement will be impromptu along with prepayment, unlike the traditional contractual model.

Between 2014 – H1 2022, logistics startups in India raised total funding of $4.5 Bn across 265 deals. In 2021, even with significant fear of a third wave looming on the Indian startup ecosystem, ecommerce startups saw a 23% increase in their GMV (Gross Merchandise Value) to $9.2 Bn during the festive season in comparison to 2020, according to a report by RedSeer. This year, experts are expecting a 40%-50% increase in orders during the festive sales.

To cater to the higher volumes of the festive season, logistics firms are also ramping up hiring. For example, logistics provider Delhivery recently announced plans to create over 75,000 seasonal jobs pan-India. Several other logistics startups are also expanding teams to fulfil the demand.

The Indian logistics sector is one of the biggest in the world, growing at an average CAGR of 10%-12% and offering new-age logistics tech services, including algorithm-powered route optimisation, real-time cargo tracking and big data-based predictive analysis. The sector is now expected to delve deeper into data analytics, AI/ML, augmented reality (AR), cloud computing and robotics solutions to amplify automation and enhance capabilities.

With companies building dark stores or opting for collaborative execution to ensure that their last-mile fulfilment does not fall short of the promise, smooth tech integration and greater flexibility will help logistics companies meet new-age customers’ requirements and preferences this festive season.

(With inputs from Meha Agarwal)