E-commerce Logistics investment soars over $1 Billion for Festive Season

As per a recent report by Redseer Strategy Consultants in Bengaluru predicts that Indian e-commerce platforms will collectively achieve sales of approximately Rs 90,000 crore during this festive season, marking an 18%-20% growth compared to the previous season. The surge in sales is expected to be driven by around 140 million online shoppers participating in the festivities.

Industry experts believe that the upcoming festive season’s hyper-shopping frenzy has driven e-commerce-related logistics companies to commit more than $1 billion in investments.

 This financial commitment is divided as follows: 40% will be allocated to expanding storage facilities, including warehousing, dark stores, and fulfillment centers; 25% will be devoted to bolstering the workforce to manage the increased workload; another 25% will be invested in technology to enhance efficiency, accuracy, and last-mile delivery capabilities; and the remaining 10% is earmarked for marketing initiatives, He adds.  

The order volumes for the festive season will increase anywhere from 5 to 8 times, thanks to the growing popularity of e-commerce, rising disposable incomes, and festival discounts, says industry experts.

In the first four days of the 2023 festive season sale, the e-commerce industry achieved a remarkable gross merchandise value (GMV) of approximately Rs 29,000 crore, marking a 16% increase compared to the GMV of nearly Rs 25,000 crore during the same period in 2022.

There has been an  increase in the adoption of online shopping by customers. To meet the demand experts says that e-commerce industry has introduced additional services for end-to-end fulfillment, such as warehousing, inventory management, and the use of technologies like AI (artificial intelligence) and ML (machine learning) for demand fulfilment.

Warehousing and Distribution:

The demand for warehousing begins to rise a month before the festive season, as goods flow in for inventory buildup. Companies adapt by implementing both flexible space management and long-term expansion strategies based on regional demand patterns. Platforms like Flipkart and Amazon release flexible warehousing demands in the market while operating on a lean operational model.

For B2B clients, a cross-docking approach is used to streamline operations, industry expert said while emphasising that the variability in demand and the need for faster delivery have increased the reliance on third-party logistics providers by e-commerce and retailers, with a 43% rise in warehouse leasing by these third-party players in the first half of 2023.

The first three quarters of 2023 witnessed gross leasing of 17 million square feet, with a 55% quarter-over-quarter growth in leasing activity in Q3 2023, as per a recent report by Colliers India. FMCG players experienced a remarkable over two-fold rise in leasing activity due to increased consumption levels over the last two quarters, which is expected to continue in the upcoming festive season.

Manpower:

Industry experts collectively estimate that the logistics industry will see a seasonal manpower increase of 50-100% for this season. People, including pickers, packers, loaders, and warehouse and delivery personnel, are crucial to logistics operations. Major e-commerce companies like Amazon and Flipkart have announced 100,000 seasonal jobs each, while Meesho has pledged 500,000 jobs to handle the increased volume of shipments during the festive season. Logistics companies Gati and Allcargo Supply Chain have hired over 1500 additional blue-collar workers to support pan-India services this season.

TeamLease Services projects that e-commerce will create nearly 700,000 gig jobs in the second half of 2023, with the sector currently having 200,000 open positions for temporary workers, primarily in last-mile delivery and warehouse operations. This year’s festive hiring is expected to witness a 25% increase in gig jobs compared to the same period last year.

Technology:

A report by CII-Alvarez & Marsal estimates that by 2030, around 80% of Indian warehouses will incorporate some form of automation. However, experts note that India has been slow in adopting technology in this regard, although progress is being made incrementally.

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