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It is November and the biggest Indian retail festival – ‘The Great Indian Sale’ and ‘The Big Billion Day Sale’ are round the corner. With over $3 Billion GMV sales expectation in just three days this year, substantial demand arising from tier 2 and tier 3 cities, & expedited fulfillment expectations, the E-commerce giants are supported by equally colossus logistics industry working in the shadow. Logistic is very important backbone for new digital economy of India. In this blogpost, we try to understand the current Logistics-Tech landscape in India & decipher who is doing what in the ecosystem.
Logistics in India
Transport & Logistics Contribute ~$196 Billion (~7% of Indian GDP). Currently, only ~10% of the total market is captured by organised participants leading to low productivity, high costs & limited range of value-added services. The dominance of unorganised players presents an opportunity for logistics-tech players to streamline operations and make a mark. To this end, annual Investments in the transport and logistics industry is expected to reach $500 Billion by 2025. Headwinds supporting the sector are:
- GST & E-way Bill Implementation: GST & E-way is likely to streamline the state-wise tax structure and ensure seamless movement of goods & reduction in transit time
- E-Commerce Boom: The eCommerce logistics market is projected to grow at a CAGR of more than 35% between 2019 and 2025. Sinking smartphone prices and data plans by telecom service providers have led to an increase in the adoption of the Internet among new users
- Government Initiatives: The Draft National Logistics Policy was finalised in February 2019, awarding infrastructure status for easier investment inflows. FM Nirmala Sitharaman in her Union budget speech remarked “The national logistics policy will clarify the roles of the Union government, state governments and key regulators. It will create a single-window e-logistics market and focus on the generation of employment, skills and making medium and small enterprises competitive.”
The Value Chain
Key touchpoints in a logistics value chain are –
- First Mile Transporters – Transport goods from producer to warehouse
- Warehouses – One of the most critical pivot point in a supply chain. Quality and stock management are the key activities performed in a warehouse
- Fulfilment Centre – The aim of a fulfilment centre is not to store but to deliver the product to end user as efficiently as possible. Packaging, Labeling, Sorting are few of the activities performed here
- Line Haul Transporters – Transportation from a fulfilment center to city/regional distribution hub
- Last Mile Transporters – Transportation from distribution hub to customer
The industry is moving from cost-efficient warehousing and transportation practices that deemphasize time-sensitivity and traceability to ‘Fulfilment’ – ability to handle break-bulk, high value orders in a cost & time sensitive manner.
The mental map we follow to understand the logistics-tech sector in India is to break the industry in a 3×2 matrix. On the horizontal axis, we cover Long haul / First Mile Trucking, Warehousing & 3rd Party Logistics Providers (3PL), and Short haul & Last Mile focussed players. On the Vertical axis, we break the industry into asset-heavy and asset-light players. In the resulting segments, we understand the popular business models and a few players as well.
While the likes of Rivigo, Blackbuck, Delhivery, GreyOrange and Dunzo are fairly popular, the industry is witnessing the emergence of a variety of exciting business models and successful firms. Delving into a few of them:
- Telematics & Fleet Management Software: Fleetx ($2.8M Series A) & Loconav ($4M Series B) provide tracking and reporting solutions for trucking fleet owners. Few of the products are – Vehicle & Fuel Tracking, Route Scheduling, Driver Behavior, Vehicle Maintenance Reports, Dash-cam, Real-Time Alarm Alerts, etc.
- Warehouse as a Service: Boxyspace and StoreMore are enabling businesses quickly scale and match fluctuating demand by providing On-Demand Warehousing facility and related services. Few of the services are – On-demand Warehousing, Real-Time Data of Inventory across locations, Daily MIS Reports, Labeling, Kitting, among others. Few B2B clients are TacoBell & Oyo.
- 3PL Marketplace & Shipping Solutions: A major problem smaller brands and enterprises face is to choose which shipping provider. Shiprocket ($13M Series C) solves this particular problem by enabling sellers to discover & book on-demand 3PL courier delivery services. AI-based courier recommendation engine based on price, ETA, etc. helps the seller get the best deal. Shiprocket Courier partners include all major players like Delhivery, FedEx & BlueDart and has channel integrations with likes of Amazon, Shopify, Ebay, among others
- Warehouse Discovery & Aggregator: A little known startup struck a major deal with Reliance Jio enabling them select 100+ warehouses across India. Edgistify enables discovery & selection of warehouses based on project parameters. Other warehouse related services like Material Handling Equipment Tracking, Warehouse Manpower Sourcing, etc. The firm boasts 780M sq ft+ on platform & Key Clients such as Reliance Jio, Myntra.
- Last-mile on-demand fulfilment network: One of the key challenge logistics players face in tier 3 & smaller regions is demand uncertainty & fluctuation leading to underutilisation of fixed assets and higher costs. Loadshare (Rs 100cr Series B) and Elastic Run ($40M Round) aim to solve the challenge by aggregating and enabling regional SMB logistics and kirana businesses with technological and operations know-how to support as on-demand capacity. The aim is to extend reach & serviceable pin codes & generate on-demand capacity for shippers using idle transportation and warehousing assets with SMB businesses
- Last Mile Route & Field Force Software: Loginext ($39M Series B) & Locus ($22M Series B) provide software solutions catering specifically to last-mile operations. Few products are Automated Last-Mile Delivery Route Planning, Real-Time Resource Allocation, Cash & Proof of Delivery, Reverse Logistics, etc. They also provide services for Mobile Field Workforce Management like scheduling & prioritising tasks for services such as Field Sale Agents, Field Technicians, Medical Reps, etc. Top Clients include marquee names like– Dominos, McDonald’s, Decathlon, etc.
The Future of Logistics – Tech eats Truck
Customer demands are increasing along with new business models, channels, & social media, and is pushing the logistics industry to transform itself into a leaner and smarter system suiting a more powerful customer. This industry transformation will become a necessity rather than a disruption, powering seamless data mapping among industry participants for an integrated ecosystem.
Digital Technologies – IoT, Blockchain, Cloud Computing, Big Data Analytics, Robotics and Automation, among others coupled with government infrastructure initiatives will lead to better & seamless integration between road, rail, air & port logistics, and result in a shift to balanced multi-modal logistics supply chain in India as compared to current road dominant logistics. Blockchain Technology is expected to play a pivoting role in creating sharing networks among entities earlier unwilling to share information, without compromising on the integrity of the data. This becomes especially relevant in the Indian context, given the fragmented nature of the sector and lack of common platforms to exchange information.
Sector’s biggest customers are starting up & investing significantly in logistics operations of their own. But to remain competitive while owning assets, the key is to share the capacity. However, much of this is hampered by inconsistencies in everything like shipment sizes, labelling processes or IT systems. Industry standardization led by industry leaders looks a definite outcome.
We expect a highly tech driven logistics industry with seamless integration between different modes as well different industry participants in the near future. Ending this blogpost with a hope that a bunch of names mentioned above will breakout from the pack and potentially create regional / global business.
Thanks to all the founders and entrepreneurs building out amazing companies. Special thanks to Sajal Maheshwari for his research for the post.
- Economic Times
- PWC Logistics Report 2018
- Tracxn Business Feed Reports
- Frost and Sullivan Logistics report 2019
- Own Research