CASE STUDY

Indian E-Commerce Logistics

Submitted by:
TEAM IGNITING MINDS
MARKET OVERVIEW

Market Estimation:

• The Indian E-commerce Logistics market size is estimated to be

approx. US$ 4B in FY’24.

• Indian e-commerce retail logistics market is expected to grow at a

CAGR of 24% to reach US$ 6.3B in FY26 from US$ 2.2B in FY21.

• E-commerce logistics growth will be driven by the e-commerce

retail market, which is expected to reach a size of approx. US$
145B by FY26.
MARKET OVERVIEW

• Currently, about 40% of shipment volume is

driven by the nation’s top 500 to 700 postal
codes (PINs).

• The next 25 or 30 cities, so-called Tier 1 cities,

consist of 1,500 to 2,000 PINs and account for
about 20% of shipment volume.

• Tier 2 cities (5,000 to 6,000 PINs) and the

remainder of the approximately 22,000 PINs in
the country account for the remaining 40% of
shipments.

Captive LSPs • Cater to time-sensitive shipments, enabling more control over the supply chain.
• Ensure service levels as demanded by e-commerce players.

Specialized LSPs • Focusing on nuances of e-commerce deliveries like handling COD orders, return pickups,
OTP confirmations etc.
• Cater to time sensitive deliveries, also providing cost effective options.
Traditional LSPs • Presence of delivery center and pickup centers across the country, preferred for placing
orders offline.
• Service reliability is high as compared to new entrants.
LSP consolidators • Cost-effective way for small and medium players to transport goods since they have
relatively lower volume.
• Provide additional services like handling payments, customer queries, tracking services,
etc.
KEY BUSINESS DRIVERS IN E-COMMERCE L0GISTICS
No. of Mobile phone internet users in India
COST STRUCTURE AND SUPPLY CHAIN IN E-COMMERCE L0GISTICS

• First Mile Products are dispatched from the seller to the

fulfilment centers/mother warehouses depending on the model
type (inventory-based model or marketplace model).

• Processing Goods are sorted and processed according to the

final destinations.

• Line Haul Line haul acts as the connecting link between the
central supply center and the central demand center. This can
be done via land or air, depending on distance and cost.

• Last Mile Last Mile refers to the shipping of the product from
mother hubs to delivery hubs, where they are shipped out to
the customers.
BUSINESS EXPANSION AND DIVERSIFICATION

• Expansion of Network and Infrastructure: Establish new fulfillment

centers, distribution hubs, and last-mile delivery facilities in
strategic locations across the country.

• Data from Statista shows that the number of internet users in India
is expected to reach 974 million by 2025.

• According to Tracxn, as of March 2024, e-commerce logistics

companies in India have raised $2.13 billion in funding.

• Diversification of Services: Offering value-added services such as

warehousing, inventory management, and reverse logistics. It will
increase asset utilization and reduce overall cost by 10-
15%(estimated).

• Parentship and Collaboration: Partner with e-commerce platforms

to grab opportunity and with small “mom and pop” shops across
Tier II and below cities for ordering and delivery of products. This
will reduce waiting time for delivery by 20-30%(estimated).
CONTINUOUS INNOVATION AND TECHNOLOGY INTEGRATION

• Embracing advanced technology such as AI, machine

learning, and IoT can optimize route planning, reduce
delivery times, and enhance overall operational
efficiency. Adopting sustainable solutions can ensure
high market capture due to changing norms.

• According to a report by KPMG India and CII,

investments in technology can potentially reduce
logistics costs by up to 20-25%.

• Also, Delhivery invested in AI and robotics to

streamline operations, leading to a reported 30%
reduction in costs.
CUSTOMER-CENTRIC APPROACH

According to a survey by PwC, 73% of consumers say that a positive delivery

experience encourages them to shop more frequently.

Timely Delivery
Timely Delivery is a crucial customer expectation, demanding efficient logistics operations
and minimal delivery lead times.
Meeting Customer
Expectations Real-time Tracking
Customers expect real-time tracking to monitor the progress of their deliveries, ensuring
transparency and reliability.
Considering Key Factors for
Delivery. Hassle-free Returns
Providing hassle-free return processes enhances customer satisfaction and loyalty,
influencing their overall delivery experience.

Personalized Delivery Options

Offering personalized delivery options, such as preferred delivery time slots, adds value to
the customer experience, fostering brand loyalty.