The Ever-growing D2C Boost For Third-party Logistics Players 3PL to ride on the back of the Indian D2C market growth which is projected up to 3 billion shipments by 2027, says a recent report by Redseer

By S Shanthi

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"By 2027, the Indian D2C market is projected to grow to a GMV of US$ 30-35 Bn and up to 3 Bn shipments. One of the direct benefactors of the D2C market growth are third-party logistics providers (3PLs)," says a recent report by Redseer Strategy Consultants.

The report highlighted that the journey of Indian D2C brands is nascent. With brand creation getting easier and incentivized, the Indian D2C market is projected to be a GMV of US$ 30-35 billion by 2027. This is a CAGR of around 40% for 2022-27, which is 3x+ that of the broader retail market and 1.6x+ that of the eCommerce market for the same period, it said.

The firm also reported that in 2022, the number of D2C shipments stood at approximately 0.5 Bn, and their projections indicate a substantial increase to 3 Bn D2C shipments by 2027. Highlighting the role 3PLs play, Mrigank Gutgutia, partner at Redseer said, "3PL solutions tie in well with the D2C segment as demand varies across cities/regions and the required logistics investment is on the higher side. Brands need reliable logistics partners with a wider reach across India to ensure consistency of experience".

Brands such as SUGAR Cosmetics, boAt, Mamaearth, mCaffeine, Kama Ayurveda, WOW Skin Science and many others have not only leveraged digital penetration to carve a niche for themselves but are trying to give stiff competition to legacy players.

According to a report by Statista, the total addressable D2C market is expected to grow by over 15 times from 2015 to 2025 in India. In 2020, the total addressable D2C market was valued at $33.1 billion. By 2025, the total addressable D2C market is forecast to grow almost threefold and reach $100 billion, with fashion and accessories leading as one of the largest D2C segments in India.

"The keys to success for 3PLs vary widely depending on the category of D2C players, however, tech-enabled reliability, shipment protection and affordable pricing are what the D2C brands in India seek the most, with pan-India reach being a fairly common expectation," he added.

Some of the prominent 3PL service providers in India include Delhivery, Shiprocket Fulfillment, Stockarea, Bluedart, Shadowfax and Xpressbees.

"Commerce across India has changed significantly over the years as business models evolved to keep pace with increased internet usage, infrastructure advancements and the rise of omnichannel, B2B2C and social commerce. Now, internet-first brands are in direct competition with legacy brands across the board as consumers increasingly move online. The current trend suggests an upward growth trajectory for e-commerce, which IBEF predicts will reach $350 billion by 2030 — up from $75 billion in 2022," said Bharati Balakrishnan, country head and director, Southeast Asia and India, Shopify, in an interview with us in April this year.

The boom in e-commerce has led to a surge in demand for logistics services, including last-mile delivery, warehousing, and transportation, among others. As a result, the e-commerce logistics segment has become one of the fastest-growing and most lucrative segments in the Indian logistics industry.

"Prior to the onset of the COVID-19 pandemic, the Logisitcs Management Division (LMD) segment was operating at a loss and primarily served as a client acquisition strategy. However, following the pandemic outbreak, there has been a significant upswing in demand for logistics services due to the surge in e-commerce activities and pent-up consumer demand. As a result, the LMD segment has become highly profitable, generating healthy margins. Despite the e-commerce companies' focus on cost optimization, which may entail the closure of some dark stores, the logistics providers' top line is unlikely to be significantly impacted," said Ankur Bansal, co-founder and director, BlackSoil.

According to the Ministry of Commerce and Industry, India's logistics sector accounts for a staggering 5% of the country's GDP today, while providing livelihood to nearly 2.2 crore Indians.

Other trends in logistics

Rise of cross-border logistics platforms: Some of the Indian platforms operating in the cross-border logistics space include Shiprocket, iThink Logistics, Porter, FreightFox, FarEye, Cogoport, Rivigo, Shipsy, Delhivery, Blackbuck, Freightwalla, and others. Among these, Shiprocket, Delhivery and Blackbuck have turned unicorns. Recently, Amazon India also launched a cross-border logistics platform, SEND, which offers end-to-end support to Indian exporters. For now, the platform is available for exporters on Amazon Global Selling.

LPaas: We are also seeing the emergence of many LPaaS (logistics platforms as a service) in the space. These platforms bridge the gap between logistics and technology by delivering one-stop solutions to micro, small and medium-scale merchants.

Automation: Further, automating freight procurement is helping businesses save on freight procurement costs through competitive bidding and fetching current rates and historical data enabling shippers to access the best freight rates every time. There is also an alarming need for real-time container tracking.

Turning data into insights: Another major trend seen today is the way startups are leveraging data to deliver actionable insights. Companies do not want to miss any data that can help them improve operations today.

S Shanthi

Senior Assistant Editor

Shanthi specializes in writing sector-specific trends, interviews and startup profiles. She has worked as a feature writer for over a decade in several print and digital media companies. 


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