Indian E-Commerce Logistics - Shipping Into The Limelight

The Indian logistics industry was one of the 'hot topics' just a couple of years back pursuant to the revolutionary GST reforms along with the introduction of the E-way bill. It was expected that the entire dynamics of the industry would change due to extinction of various taxes especially octroi, however in reality it was found out that this was just another hype and that the industry still functions more or less the same owing to poor GST implementation per se.

Fast forward to 2019-20, opportunities galore for logistics, but this time it is attributed to the triumph of e-commerce in India. E-commerce in India has already taken-off, however, it is set to champion the rally in the coming years; with a significant share owing to the emergence of JioMart. Jio's vision of digitalisation augurs well for the industry, probably being a game-changer. On the back of leading global investors, it is expected that JioMart will turn the tide in the logistics market, quite similar to what witnessed in the telecom market. The market share dynamics would also change, as Amazon and Flipkart which combine to form 90% of the e commerce market, will see their market shares decline. Additionally, the pandemic and new social distancing norms can also turn out to be the icing on the cake.

The primary crux of this insight is to study the Indian logistics sector and to determine the reaction towards expected boom in e-commerce. Currently, the logistics industry has a good mix of established listed players like Blue Dart, private/startups like Delhivery and captive players like ATS, offering a wide range of services across surface, 3PL and e-commerce.

As per our channel checks, we realised that the upcoming e-commerce traction would act as a 'Santa' to all the players; since there is no particular player who is a leader across all the services. The pie will be shared by those engaging in surface and 3PL as well, apart from the e-commerce oriented entities. However, the key is that e-commerce services of all the players will take the hot seat, and would represent close to one-third of revenues.

In the battle of public players vs the startups, we presume that the startups have a leading edge, especially due to their already-high specialisation in e-commerce and the ability to get funded regularly. Lastly, our preferred pick among all the players would be E-kart, Delhivery and to some extent, 'Grab' in the private space. Among the listed entities, we assume Blue Dart Express (BDE IN) , Mahindra Logistics (MAHLOG IN) and TCI Express to gain a relatively higher advantage.