3PL providers to accelerate growth for early-stage D2C brands

The annual direct to consumer (D2C) shipments market could reach $2.2-2.7 billion by 2028, growing at 35-40 percent year-on-year from 2023 to 2028, according to the latest report from Redseer.

The annual D2C shipments have skyrocketed from 0.1 billion in 2019 to 0.6 billion in 2023 with a significant portion of these shipments attributed to the services of the 3PL providers who play a major role in delivering superior customer service, the report added.

"3PL providers offer tailored and comprehensive end-to-end logistics services including warehousing, inventory management, shipment intelligence, and transportation. These services have become crucial for young brands that now have access to advanced logistics infrastructure without the need for significant capital investment."

Redseer Strategy Consultants spoke to around 60 emerging brands in India, and the study revealed a growing trend of these brands partnering directly with 3PL service providers, recognising their customised solutions approach. "This strategy allows young brands to leverage 3PL expertise, adapt to their evolving logistical requirements, and concentrate on core business activities while solidifying their presence in today's competitive brandverse."

The report underscores how 3PL players are innovating to meet the increasing demands of new-age D2C brands. Some of the proactive measures undertaken include:

*3PL providers are investing heavily in technology and infrastructure, offering accelerated delivery times, real-time tracking, non-delivery reports, and predictive analytics for returns.

*They provide seamless cash-on-delivery (COD) solutions with swift remittance, typically within 48 hours, which is vital for the working capital of smaller brands.

*They support new-age brands through offline market expansions, offering integrated logistics and supply chain solutions including warehousing, express part-truckload and full-truckload freight and streamlined distribution to brick-and-mortar stores; and

*They ensure consistent service levels, prompt issue resolution and personalised account management, making the logistics process hassle-free.

“Third-party logistics (3PL) providers are integral to the value-chain of the new age D2C brands," says Kanishka Mohan, Partner, Redseer Strategy Consultants. "They are continuously innovating to address the unique needs of these brands, fostering partnerships from the early stages of the brand journey.”

Redseer has highlighted factors like brand and customer experience and operational efficiencies that are important for new-age brands when choosing their preferred partners. While both Delhivery and Bluedart stand out on overall metrics, Delhivery has outperformed in providing superior customer experience and features as it provides a full stack solution, the report added.