As e-commerce firms like Amazon, Flipkart, Bigbasket, and FirstCry witness an expected slowdown in consumer demand on a large base, their demand for warehousing space has come down significantly this calendar year, recent studies show.
Data from property consultancy firm Colliers reveals that the e-commerce companies have contributed to a mere 4% of total warehousing leasing in the first half of 2022, down from 23% in the first half of last year.
The top five e-commerce companies alone have seen an 83% drop in leasing activity in the first eight months of 2022 through August compared to 2021 when the segment saw 107% growth in space take up, said another report by real estate data analytics company CRE Matrix.
As per CRE Matrix data, e-commerce giant Amazon has leased 1.4 million square feet of warehousing space in the first half of 2022, while its rival Flipkart has leased only 0.11 million sq ft. The Tata-owned BigBasket has only leased 0.3 million sq ft. of warehousing space this year. Other significant players like FirstCry and Blinkit (formerly Grofers) also have not leased large warehouse space so far this calendar year.
There is a slowdown in leasing from e-commerce as the sector already doubled the size of its operations in the last two years. During the pandemic the e-commerce firms have added more warehouses and workers to keep up with the skyrocketing demand from homebound consumers who felt more comfortable buying things online, experts said adding that the segment will remain resilient and will see a sharp bounce back in 2023.
It is expected that the warehousing demand from e-commerce players will have a strong rebound by the end of 2023, followed by retail and manufacturing.
E-commerce companies are seen ramping up their hiring process as they anticipate an increased demand across metros and non-metros during the upcoming festive season. Moreover, the Indian e-commerce market is expected to grow manifold in the next five years.
Along with this, government policies like National Logistics Policy (NLP), PM Gati Shakti national multi-modal connectivity initiative, an improved rail and road network, and a growing direct-to-consumer (D2C) business in the country, paints a promising picture for the logistics industry in the long term.