Logistics companies in India are looking at increasing capacities of their warehouses and fulfilment centres by 25-50% in the coming three months fuelled by the rise in online shopping expected during the upcoming festive season.
E-commerce retailers are expected to garner sales of $11.8 billion in gross merchandise value (GMV) during this year’s festive season, up 28% year-on-year, according to a report by consultancy firm Redseer. The first week of the festival season itself is expected to garner sales of $5.9 billion.
Logistics startups and legacy players alike are banking on this high order inflow. Transport Corporation of India (TCI) expects its capacity, resource allocation and utilisation to go up by 20-25% during the upcoming festive season.
Godrej Storage Solutions, the intralogistics business of Godrej & Boyce has also prepared itself to meet peak season demand by offering buffer storage wherein the stocks are palletised prior to distribution. It is offering a range of systems like shuttle pallet racking that caters to inbound and outbound buffer storage and can accommodate different SKUs at every level to enable easy retrieval of the pallet of choice.
Shiprocket, the e-commerce logistics and shipping software solutions company has increased the capacity by 50% from 30 to 45 warehouses both for festive season and as part of normal growth expected. “For the festive season, we have significantly ramped up capacity in our fulfilment centres to ensure a smooth and hassle-free experience for our customers,” Saahil Goel, co-founder and CEO, Shiprocket told FE.
Punit Gupta, founder and CEO, EasyEcom said that with the festive season around the corner, India is experiencing a 3x surge in order volume across the board for e-commerce merchants. Also, this year’s theme is centred around same-day and next-day delivery, requiring manpower, ground coordination and space planning, coming more from tier-1 and tier-2 cities where demand is hyper localised. “Merchants generally plan to open 3-4 large fulfilment centres in major cities and 20-25 depot style micro fulfilment centres to locally cater to the demand,” he said.
Shakedeal, too, has begun adding warehousing capacity and operational manpower to ramp up its supply chain. “Though we operate mostly in an asset light JIT (just-in-time) model, we are adding over 25% or about 15,000 square feet additional capacity to our warehouses to scale up for this festive season’s foreseeable demand,” said Akash Hegde, co-founder, ShakeDeal.
Another Godrej company—Godrej Interio has also employed innovative technology solutions to manage its backend to ensure meeting the rise in demand smoothly. “Direct despatches are planned to larger dealers from the central warehouses. Overall, this is controlled centrally with a proprietary software application which provides visibility and makes recommendations for optimising stock levels and logistic costs,” said Swapneel Nagarkar, senior vice president and business head, Godrej Interio.
Ankur Singhai, vice president (e-commerce business), Mahindra Logistics anticipates 3x-5x spike in demand across categories during the festive season. “We build temporary capacity for a variety of inputs, including labour, space, tools, and vehicles throughout the supply chain. We are leveraging our range of electric vehicles for last-mile operations. To address the challenge of limited gig workers, we are providing accommodation, transportation and meal facilities to the workforce, including migrant workers, in some cities,” he said.
Kami Viswanathan, senior vice president, (MEISA Operations), FedEx Express, said that during festive demand the company is providing a broader range of shipping solutions and reliability of services, to enable businesses expand their e-commerce capabilities to new markets and grow their customer base.
The net demand in 2022 is likely to surpass the demand for warehousing space seen in 2021, with the first six months of 2022 seeing close to 20 million square feet absorbed versus 39.5 million square feet of net demand witnessed in the entire of 2021, according to JLL India. The overall supply witnessed a CAGR of 17% during 2016-2021 to 258 million square feet with increase in Grade A supply mix from 30% in 2016 to 45% in 2021, according to ratings firm Icra.