Online shopping is growing across the world, as we have seen with the e-commerce frenzy being witnessed in China, which is forecast to become the largest cross-border B2C market in the world by 2020.
Now this growth has reached India, where consumer demand is leading companies to improve their e-commerce offerings by giving customers access to an almost infinite choice of products through online purchasing channels, backed up by consistent and seamless delivery.
The rapid evolution of India’s e-commerce scene is being aided by increased consumption, heightened shopper expectations and the country’s proposed Goods and Services Tax, which is set to simplify a network of complex local sales taxes.
As the scale of e-commerce growth in India intensifies, e-commerce providers require access to better quality logistics, infrastructure and warehousing facilities to support this growth. Indeed, according to property advisory firm CBRE, e-commerce has emerged as one of the main drivers of demand for warehousing in India, second only to third-party logistics operators.
In 2012, e-commerce firms accounted for just 2% of total warehousing demand. Last year, that figure increased to 22% (2 million sq. ft. of warehouse space), according to CBRE.
As a result, a number of private equity funds, real estate developers and high net worth individuals are investing directly in warehousing and logistics facilities in India to support the growing popularity of online shopping.
India’s e-commerce companies are themselves expected to invest around USD 6-8 billion in the next few years, according to another study by ASSOCHAM and PwC.
Meanwhile, the latest World Bank ranking of global logistics performance reflects this growing focus on logistics, with India jumping 19 places (from 54th to 35th) in the organisation’s most recent Logistics Performance Index.
At a more local level, e-commerce firms are seeking new ways to compete with rivals in providing the most comprehensive logistics and delivery networks. In Mumbai, for example, online marketplace Flipkart has teamed up with the city’s renowned ‘Dabbawalas’ to provide last-mile delivery to customers. The company is also exploring a crowd-sourced delivery model to connect buyers and sellers and reduce delivery times, using local volunteers to deliver packages.
To find out more about the rapid growth of e-commerce in India, join Mark at the 10th Express, Logistics and Supply Chain Conclave in Mumbai this September, where he is engaged as both Conference Chairman and Keynote Speaker.
If you are interested in investing in India, download the new guide from Dezan Shira, ‘An Introduction to Doing Business in India 2016’.