Spotlight India: Shaping the future of ecommerce and logistics in the world’s most populous country
As business leaders move toward multi-sourcing, many are turning to India – a big player with a fast-growing consumer market. So what does the future of ecommerce and logistics look like in this dynamic market?
Is India a game-changer?
According to the United Nations, India is expected to become the world’s most populous country in 2023. Some experts even believe the South Asian country may hold the top spot already. India is also the world’s fifth-largest economy and growing rapidly, making it a prime target for businesses seeking new opportunities.
What do these developments mean for ecommerce and logistics? Could India be a game changer for companies across the world? In this country spotlight, we look at India’s emerging economy and the role of logistics.
India on the rise
India’s rapid economic growth has been turning heads for years. In the fourth quarter of 2021, the country surpassed the UK to become the world’s fifth-largest economy based on gross domestic product – behind only the United States, China, Japan, and Germany. It is expected to be the world’s fastest-growing major economy in 2023, driven mainly by a post-pandemic spending boom.
Looking ahead to 2030, India’s ecommerce market is projected to be worth $350 billion (€320 billion) by 2030, up from nearly $75 billion (€69 billion) in 2022. That’s partly because the online shopper base will likely grow from 150 million in 2021 to 350 million in 2026.
Forecasts show the logistics sector alone expanding at an annual compounded growth rate of 8% by 2025, reaching an estimated $330 billion (€302 billion). Ecommerce logistics in India is now one of the world’s fastest-growing markets, expected to reach $9 billion (€8.2 billion) by 2026.
Unsurprisingly, analysts expect to see significant foreign inflows in the next few years. These first movers will have an opportunity to shape the future of logistics in the country.
First movers on the go
The business world is moving toward a multi-sourcing strategy, where customers prefer having multiple sources of supply. As part of this global shift, companies worldwide are turning to India to expand their operations by manufacturing domestically, gaining access to the labor pool, and selling to a large consumer base.
Moreover, the digital transformation will change the domestic retail consumer market in the next ten years. Leading multinational corporations like Amazon, Walmart, and Singapore-based Shopee are already getting into the local ecommerce game. Apple reportedly wants to make 25% of its iPhones in India.
This certainly presents many opportunities for the logistics sector as well, which is why we’re making a substantial investment in the country to boost our capacity, personnel, and sustainability initiatives. By 2026, we’ll nearly double our warehousing space and workforce to 22 million square feet and about 25,000 people. We’re also converting our entire urban fleet to green fuel and electric vehicles (EVs) by 2025. Our two-wheeler fleet – an essential component of last-mile delivery in India – is already 100% electric.
Want it Delivered?
Why go looking for the latest logistics trends and business insights when you can have them delivered right to you?
Challenges up ahead
One of the biggest challenges in India right now is also a global problem: attracting and retaining talent. The competition is fierce, which is why we, too, are focused on upskilling our workforce to adapt to the digital transformation in the logistics industry.
India’s logistics sector has traditionally relied on the labor force to perform manual-intensive tasks. But a skilled, digitalized workforce is critical to the country’s economic growth. The government has also recognized the need to modernize the industry and increase efficiency. Since 2017, India’s Logistics Division has been tasked with driving innovation and much-needed digitalization. And businesses have started adopting tools to digitalize their end-to-end logistics operations and gain more visibility over their logistics network.
Upskilled human resources are crucial for a nationwide, systematic, and digitalized logistics network that provides businesses with all the necessary services – from transportation and warehousing to order processing and delivery. So, slowly but surely, we will see fewer clipboards and pushcarts and more tablets and robots.
Fast fulfillment is key
One of the biggest ecommerce challenges in India is getting products to consumers in the shortest time and most sustainable way possible while managing various order spikes during multiple sales events throughout the year. This is where an efficient, nationwide fulfillment network becomes key. We first launched our DHL Fulfillment Network (DFN) in Bengaluru, followed by Mumbai and Delhi NCR. Now we’re enhancing it to serve our customer’s Pan-India needs. Customers can use the technology and scalability to create an omnichannel sales environment and reach the country’s online shoppers more easily. Integrated with marketplaces, brand websites, and inventory stocking points, our DFN creates a seamless network, which brands can use to increase reach, spread inventory closer to shoppers, and manage peaks effectively.
Sustainable ecommerce is the end game
Ecommerce is undoubtedly one of India’s biggest business success stories. The top product segments driving this growth are beauty and personal care, health and pharmaceuticals, fashion accessories, fast-moving consumer goods, and footwear. But as the online shopping boom transforms the economy and industry, it also leaves a large environmental footprint. Therefore, a path to sustainability will be vital to maintaining and accelerating the country’s growth.
That’s because Indian consumers are becoming increasingly aware of the impact of last-mile delivery on pollution and air quality. They’re demanding more sustainable practices. A recent survey by Bain & Company showed that urban consumers in India are ready to pay more for planet-friendly brands. Some 52% say they will opt for sustainable brands in the coming years. And more than 60% indicated they would be willing to pay a premium for sustainable products.
Luckily, we see signs that many stakeholders are focusing on sustainability despite the daunting challenges. Many of our partners have paid attention and are taking action. For example, Flipkart is transitioning its entire last-mile fleet to EVs by 2030 and striving to reduce waste and use more sustainable packaging. It eliminated single-use plastic packaging from its supply chain in 2021. Dunzo, a last-mile delivery firm for groceries and other essential items, uses micro-fulfillment centers close to end customers to cut carbon emissions and costs.
India’s ecommerce future is fast and green
It’s clear that speed and sustainability will have to go hand-in-hand for India’s ecommerce industry to fulfill its true potential. The world’s fastest-growing major economy – and now (probably) the planet’s most populous country – will need a robust ecommerce delivery ecosystem that is both economically and environmentally sustainable to meet growing consumer demand.
But with increasing awareness, a growing skilled workforce, and sheer demand, the country is poised to meet the challenges ahead and sustain its explosive growth.
Published: March 2023