PGA Labs, the business research and market intelligence firm, recently published their report on e-com retail logistics market’s outlook and have predicted its growth at a CAGR of 24% to USD 6.3 billion in FY26, up from USD 2.2 billion in FY21. The growth has been attributed to the e-com retail market climbing to reach USD 145 billion by FY26, while churning almost 15 million shipments each day.
The E-commerce industry is positively influencing the growth of E-commerce logistics market in India. The online-focused players partner with third-party logistics (3PL) providers to manage delivery, inventory, packaging, shipping, warehousing, and tracking issues,”Abhishek Maiti, Director, PGA Labs
The report also noted that e-com adoption and activity has been increasing steadily, including the Tier-2/Tier-3 cities and other smaller towns. While in CY2015, shipments from such areas took a 25% share, in CY20 almost 46% shipments could be sourced back to these areas.
According to PGA, factors like COVID-19 pandemic, outsourcing of logistics processes, and increased penetration of digital technology across the country, have been pivotal in boosting online purchases. Additionally, the report mentioned that the lack of proper infrastructure for air & land transport, which ultimately leads to inefficiency, longer transit times, higher logistics costs, and higher returns – have been negatively impacting the Indian logistics industry. In addition to the infrastructural inefficiencies, a high return rate and a high share of cash on delivery (COD) orders also drive the cost of deliveries. The return rate for overall e-com retail is around 18-25%, driving up the logistics costs.