E-Commerce Retail Logistics in
Driving
the Change
from KPMG and CCI Institute of Logistics
Reviewed by Prof Archie D'Souza
Logistics
is the key enabler in driving the change in e-commerce in India. The
size of E-Commerce in the world is today USD 2.5 trillion, China
is the largest ecommerce retail market at USD 840 billion, the
US at 550 billion is a distant second at 140 billion; Britain,
another large market with 110 billion comes third. In contrast, it
is just 20 billion in India, but growing at an annual compound rate
of 35 to 40 percent. This means that it will more than double every
three years. China moves 52 million shipments a day,
compared to 1.8 to 1.9 for India.
All
this and much more is brought out very nicely in a 22 page compact
but comprehensive report entitled
E-Commerce Retail Logistics in India and,
aptly subtitled Driving the Change. The report is authored by
a team fromKPMG in India and jointly published by KPMG and the
Confederation of Indian Industry Institute of Logistics. The
e-commerce logistics ecosystem is supposed to grow year on year at
50%. Non-metros will drive this growth and logistics will bridge the
gap. Increasing internet penetration, smartphone usage, and
language diversity on e-commerce platforms have led to substantial
growth of e-commerce platforms in India.
Starting with a foreword by KPMG in India, the report is divided into
four parts followed by a conclusion. The foreword mentions the
challenges the industry is trying to overcome in spite of, or
perhaps, due to the rapid growth. These include high cost pressures,
high returns of shipments and inadequate physical infrastructure.
High expectations from clients have led to several innovations never
conceived till very recently.
The four parts are named as follows:
- Overview of E-Commerce Retail Logistics in India
- Indian E-Commerce Retail Logistics
- Regulatory Environment in E-Commerce Retail Logistics
- Upcoming Trends in Shaping E-Commerce Retail Logistics
That so much could be covered in 22 pages is a tribute to the team of
co-authors. Almost every page has apt illustrations and excellent
colour coded pie-diagrams. A startling revelation is that the top
three players account for over 70% of the total online retail market
in India.
Among the growth trends mentioned here are:
- Internet penetration is on the rise
- Mobile will be a game changer
- Language diversity
- Advent of social commerce
- Convergence of customers across multiple e-commerce businesses with the use of technology
- Digital wallets to ride on growth wave
How
do e-commerce players cope with the demands of the market? This is,
thanks to the e-commerce retail logistics' sector landscape. Among
the service providers are the traditional ones; e-commerce focussed
ones and captive logistics arms, i.e. in-house logistics departments
in companies. I did notice, though, an inconsistency in the
pie-diagram and text.
Starting
from first
mile logistics
to last
mile delivery, with
fulfilment,
processing/sorting, and
line
haul
coming in between, the report covers every activity including
returns. Listed out are some recent trends in returns, not to forget
challenges therein.
Text
and pie-diagrams very well describe Cost Structures in E-Commerce
Transportation; modal, zonal, demand centre and product category
shifts are some of the recent trends. What challenges do e-commerce
logistics players face? These include cost pressures, high rate of
return shipments, poor infrastructure and being ready for
cross-border e-commerce industry. Though touched upon briefly in the
foreword, this is dealt with in detail here. A good deal of space is
devoted to the impact of GST implementation.
The
report then takes us through the regulatory environment including
direct tax implications in e-commerce retail logistics. Upcoming
trends shaping the e-commerce retail logistics sector starts with
innovations in last mile delivery. Five business models are
described in a multi-coloured box. Other innovations include
technology and supply chain innovations.
The
report concludes with four steps on the way forward for the sector.
These are, increase in surface connectivity, large e-retailers
expanding, rise in demand from tier II and beyond, and emergence of
new product categories.
Every
person interested in the e-commerce retail logistics sector in India,
whether from an academic, financial, marketing or operational point
of view, must read and reread this report.
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