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India's e-commerce logistics market is set to expand rapidly, outpacing the overall industry with a compound annual growth rate (CAGR) of 16 per cent by FY30, according to a report by JP Morgan.
The growth will be driven by rising customer penetration in tier-2 and smaller cities along with tech-driven efficiencies. "We see India's B2C e-commerce logistics market outpacing the industry at a 16 per cent CAGR to FY30E, led by rising customer penetration in tier 2+cities", it stated. The report said India's business-to-consumer (B2C) e-commerce logistics segment is performing better than the broader logistics industry. However, the overall industry has not invested enough to keep pace with the rising demand. While India's logistics market has low entry barriers, it faces high scale barriers, which makes it difficult for many players to achieve sustainable, large-scale operations. The report also cautioned that several e-commerce logistics players are still not profitable, and consolidation in the industry could continue if e-commerce growth does not accelerate significantly. Pricing pressures due to slowing consumer demand and e-commerce companies bringing deliveries in-house are also expected to add to consolidation trends. The report highlighted that demand from tier-2 and beyond cities is a key growth driver. At the same time, serving these markets poses challenges such as poor road infrastructure and more delivery touchpoints. To address this, companies are relying on technology-led solutions including strong tracking systems, real-time communication tools, and route optimization technologies to ensure timely deliveries. Third-party logistics (3PL) providers are also increasingly using artificial intelligence (AI) and machine learning (ML) for greater efficiency. By analyzing geocode data from shipments across the country, they are able to optimize shipment routes, refine addresses, reduce delivery times, and cut operational costs. Consumer expectations are also changing, with faster turnaround times becoming a priority. Same-day and next-day delivery services are now key offerings for major B2C e-commerce companies, with many customers willing to pay more for quicker delivery. The report further noted that large Indian conglomerates have adopted omni-channel retail models and set up local or regional fulfillment centers. This approach has helped improve turnaround times and enhance overall customer experience. (ANI)
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