| | MAY 20218E ven before the COVID 19 pandemic provided a mas-sive push to e-retail and online delivery services, the logistics sector in India was on a booming path. Ac-cording to a market research released in 2020, the logistics market in India was projected to grow at a CAGR of 10.5% between 2019 and 2025 . Covid 19 has further accelerated this growth.With doorstep delivery now an expectation not a luxury anymore, dependence on online services has grown exponentially almost overnight.As online buyers surge even in smaller towns, the pandemic has clearly shown that it takes 21 days to form a new habit.With online sales still comprising just 1.6% of the total retail sales in India compared to 14% globally, we are look-ing at a massive opportunity for the logistics sector in the near future. With its 14 million retail stores, 1.5 million restau-rants and 1 million pharmacies, India also presents an infinite demand for last mile delivery.With even local businesses turn-ing to online delivery commit-ments, the level of hyper-local logistics delivery will get deeper, demand for transparency and tracking will increase, so will the demand for efficient delivery services from B2C as well as B2B segments.We will increasingly need business models that are not only efficient but also adept at scaling up without compromis-ing on customer experience. The India Model: Need For Multi Vertical Delivery ModelsFor the logistics sector in India, this is an exciting as well as challenging phase. The sector needs to adapt itself to meet the changing needs of the time by revamping its service modelsand adopting a full cycle approach to the three essen-tial components of a delivery experience: ordering, pick-up and delivery.Interestingly, the Indian on-demand industry has so far imitated the US model of vertical-focused delivery startups that are focused mainly on food, grocery, and medicines. However, there lies a fundamental difference in the Indian and US markets. The average order value in India is signifi-cantly smaller than that in the US, making single vertical op-erations unconducive to economics.In Indian settings, inno-vative horizontal or multi-vertical delivery platforms would yield better unit economics by catering to diverse sectors. Clearly as digitization takes centrestage and customer expectations evolve, the post COVID boom demands great-er innovation and adaptation from logistics service pro-viders including experimenting with new delivery models and leveraging tech-enabled systems with data analysis as their bedrock. Localised data, demand predictability, area LOGISTICS SERVICE PROVIDERS MUST ADAPT TO MEET THE POST COVID BOOMBy Hemanth Chandra, CEO, PickkupVANTAGE POINT
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