Page 29 - Indian Transport & Logistics News July - August 2024 Issue for Website

model may not be viable for quick for e-commerce players. In future, Volmo, the captive logistics arm
commerce companies. On the other any move by quick commerce players of e-commerce major Meesho,
hand, customers have limited time to for entry in apparel may further hit is already developing a model to
go to markets to buy routine things in e-commerce players. minimise logistics costs, for low-value
Metro and Tier 1 environments leading So far, all four major quick merchandise, with unorganised and
to higher order frequency. In smaller commerce players: Swiggy Instamart, fragmented vendors. Volmo’s model
cities customers have sufficient time Blinkit, Zepto and Big Basket largely might have certain limitations in terms
to go to markets and travel time to manage their own logistics, especially of the quality of services, but it poses
market is very low. Customers of with multiple last-mile vendors. a severe challenge to major players in
smaller cities wait for 2-3 days for Organised players like Shadowfax and their pricing of e-commerce delivery.
some specific things bought through Elastic Run are also delivering some In India per unit delivery cost of an
e-commerce channels for a better parts of quick commerce for these e-commerce shipment is already 30
product option or value. companies, but major e-commerce percent lower than in China, where
Quick commerce, a segment logistics players have a negligible share the e-commerce industry is multiple
which started with delivery of milk to in quick commerce deliveries. So far, times larger e-commerce market. All
households expanded to perishables, major e-commerce logistics service Chinese e-commerce logistics majors
groceries and various other things of providers have been reluctant to provide post healthy EBITDA margins, unlike
daily needs. A few months back quick service on a single leg – dark store to their Indian counterparts. Under the
commerce players started delivering customers, as the value proposition of given scenario any hike in e-commerce
smaller electronics products like these major players remains around delivery price is unlikely. Till a couple
earphones and chargers. Latest end-to-end services requiring large & of years back, the only hope for the
addition to the product portfolio of complex network operations. e-commerce logistics players to
quick commerce companies is mobiles The declining growth rate of become profitable was volume and
and white goods. This addition will e-commerce, reduced funding and stiff cost optimisation. A high growth
adversely impact e-commerce players, competition have created tremendous rate in e-commerce volumes seems
as mobiles along with white goods & pressure on e-commerce logistics unlikely due to competition from quick
appliances contribute the maximum companies, especially for profitability. commerce. This has led to a change in
In such a scenario, further stagnation the thought of e-commerce logistics
or slow growth in urban volumes players to consider joining hands
of e-commerce shipments will with quick commerce companies to
increase pressure on logistics service provide services and snatch volumes
providers. In semi-urban and rural from them. But days to come will be
markets per unit merchandise value more challenging for e-commerce
of e-commerce purchases remains logistics service providers to attain
lesser than in urban markets, which profitability aligned with shareholders'
leaves to lesser headroom for delivery expectations.
cost, while cost of delivering in
smaller cities is relatively higher for Vikash Khatri is the founder of the logistics &
logistics service providers. supply chain advisory and execution support
firm Aviral Consulting.

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