High Logistics Costs Curb Ecommerce Growth in India

The World Bank states that high logistics costs are slowing down the growth of eCommerce in India

E-Commerce has significantly influenced the way Indians shop and has redefined the Indian retail industry. The Indian e-commerce market is growing rapidly and is estimated to reach US$84 billion in 2020. However, despite the explosive growth, the World Bank recently reported that eCommerce sales only account for 1.6 % of the total retail sales in the country. On the other hand, in countries like China, revenue from e-commerce makes up to 15% of the total retail revenue.

The report which focuses on the key challenges faced by e-commerce companies in South Asia, states that high logistics costs, poor logistics infrastructure, and digital regulations are the primary concerns for e-commerce companies in the region. In a developing economy like India, logistics challenges are pretty obvious.

In the recent past, there has been a sudden rise in tier 2 and tier 3 cities in India, which are high potential markets for e-commerce companies. However, the problem is accessibility to these cities as they are connected with poor rail and roadways. The delivery networks are mostly unorganized, fragmented and chaotic.

Another major problem is the slow adoption of tech-driven logistics solutions by small and medium e-commerce enterprises. It leads to the under-utilization of ground resources such as drivers and delivery agents and inefficiencies in operations. To add to it, last-mile deliveries are becoming highly complex with hyperlocal and next/same-day delivery expectations of customers.

With the help of new-age tech solutions in AI and automation, e-commerce companies can optimize delivery networks, plan dispatches smartly, track shipments as they move and ensure a better last-mile experience to the end customer while reducing operating costs significantly.

Technology is the true game-changer for e-commerce companies to rise above the heat of the competition from multinational giants such as Amazon and fight off deep-rooted logistics problems effectively.

Locus helps e-commerce companies achieve business goals efficiently with proprietary logistics solutions.