“Indian small towns now account for a greater volume of e-commerce sales. E-commerce growth in Tier 2 and Tier 3 cities in India is outpacing that of Tier 1 cities,” said a report by ICICI. Securities.
The volume share of these smaller cities in the Indian e-commerce market increased from 32% YoY to 46% in Q4CY20. Additionally, online spending per customer in Tier 2 and Tier 3 cities also improved, with these cities holding 43% of e-commerce sales value last quarter, compared to 26% year-over-year.
“This has raised hopes for a sustainable last-mile delivery economy for the industry – but hyperlocal last-mile small parcel deliveries remain more economically challenging than ever,” he said.
“We continue to see the emergence of end-to-end logistics contracts with Bajaj Electricals and Flipkart with Mahindra Logistics,” he said, adding that the trend, while increasing the value of the service provider, is also gaining momentum. popularity as the emergence of multiple channels increases. supply chain challenge and risks.
In a way, this also increases the demand for organized warehousing, according to the report.
He noted that after the implementation of GST, a gradual move towards “grade A+/grade A++” large-format organized warehousing opens up significant business opportunities for industry participants.
ICICI Securities, however, sees challenges with asset-heavy road transport players and he said many transport models are at risk of not reinventing themselves, especially as the business environment for SMEs recovers and the new startup ecosystem is starting to aggressively target the same thing.