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Fuelled by COVID-led demand, logistics players to grow 3-times by 2024: Study

Several FMCG majors and retailers had introduced direct-to-consumer channels last year as the offline channel witnessed low footfalls and faced supply-chain constraints due to the pandemic.

April 19, 2021 / 08:32 PM IST
Delhivery trucking terminal at Bilaspur (Image: Twitter / @delhivery)

Delhivery trucking terminal at Bilaspur (Image: Twitter / @delhivery)

As brands across the industries realign their strategies to focus on e-commerce in the wake of the COVID-19 pandemic, third-party logistics players such as Delhivery, Ecom Express, Xpressbees are set out to gain.

According to a report released by consulting firm RedSeer on Monday, the companies, which currently account for 0.85 billion e-commerce shipments in the country out of overall 3 billion shipments (in 2020), are expected to fulfill 3 billion shipments by 2024.

E-commerce shipments in the country, the RedSeer report says, are slated to grow four times to 12 billion by 2024.

Several FMCG majors and retailers had introduced direct-to-consumer channels last year as the offline channel witnessed low footfalls and faced supply-chain constraints due to the pandemic. Companies such as Marico, Britannia, Godrej Consumer Products tied up with hyper-local delivery apps.

Eventually, the FMCG market reported over 7% growth in the fourth quarter of calendar year 2020 (Q4) as compared to 0.9% in Q3 and -19% degrowth in Q2, according to market researcher Nielsen. With the country battling a second wave of the COVID-19, the brands have now renewed their digital strategies.

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RedSeer report, too, lists factors such as increased adoption of online platforms due to the pandemic, expansion of e-commerce to tier II and beyond cities, and growth of new segments as demand-side drivers of this surge. Backed by these trends, e-commerce is expected to grow to up to $140 billion by 2025, as per the consulting firm.

The third-party logistics players also increased their share in the e-commerce market last year due to pandemic-fuelled demand.

“3PL share grew to 27% in 2020 from 22%, due to sudden spike in demand after COVID-19, especially, for e-grocery and e-tailing which could not be handled only by captives,” says the report.

“This sudden growth is expected to stabilise at 25% in the next four years,” it adds.

The rest 73% share, the report reveals, is commanded by captive logistics arms of e-commerce companies. Flipkart and Amazon through their respective captive arms — Ekart and ATS — have the largest share in this market, according to industry reports. Of late, mobility players Rapido and Dunzo, too, have entered the segment and are offering hyperlocal solutions to brands.
first published: Apr 19, 2021 07:56 pm

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