Funding in the third party e-commerce logistics space has increased by almost 20% in the first six months of this calendar year as compared to the same period in 2016, as e-commerce companies have started outsourcing fulfillment operations to logistics partners. Data from research firm Tracxn reveals that $147.6 million has been invested in the first half of 2017 from January to June as compared to $124.4 million in the similar period last year. According to Tracxn, while Delhivery.com, Elastic Run and EMIZA Inc acquired the largest share of investments in 2017, Ekart Logistics and Xpressbees received the largest chunk in 2016. Delhivery and Ekart are the biggest logistics partners for e-commerce marketplace Flipkart. Gurgaon-based logistics company SSN Logistics Private Limited which runs Delhivery.com received a sum of $30 million in 2017 from private equity firm Fosun International. Delhivery is backed by New York based Tiger Global Management from whom they have raised $85 million in series D. Pratish Sanghvi, co-founder of Grab.in which specialises in last mile delivery says this space is slowly witnessing greater outsourcing. “The new thing that many of the e-commerce companies are doing is that they open up a fulfillment centre and tell us to look after it entirely. While logistics is a slow growth area as far as start-ups are concerned, third party logistics players in the industry are rising up to the e-commerce industry’s requirements by managing complete fulfillment centres. Milind Sharma, co-founder of Nuvo Logistics says that the market has slowed down a lot with Snapdeal cutting down its operations. Many of the third party e-commerce logistics companies were working with Snapdeal.
“’Only Delhivery has raised a good amount of money ($263.10 million) since they have the highest share in the market. One thing that benefits them over either E-Comm Express or Gojavas is that they are funded by Tiger, and Flipkart is in a pole position in e-commerce space so a preference is given to them,” he says. Only Amazon does not completely outsource their logistics, but fragments of the supply chain, because they don’t want to disturb the experience and service levels. According to KPMG’s report on e-commerce retail logistics, about 50% of the e-commerce logistics market is commanded by in-house logistics players, while the other 50% is controlled by third party logistics (3PLs) service providers including traditional logistics service providers (LSPs) and India Post. With India Post having the best last mile reach in the country and servicing the maximum number of pincodes, serviceability and coverage are the biggest challenges for these logistics companies. While all major logistic companies in India like BlueDart, Aramex, DTDC (Dot Zot), FirstFlight, Delhivery, FedEx are doing third party logistics for all major and small e-commerce companies, industry insiders believe that the smaller logistics start-ups will find it difficult to gain any market because of the competition from bigger players.
Ondrila S Sarkar