D2C sector is expected to touch $100 bn by 2025: Gaurav Mangla, Pickrr Technologies
Adgully is back with a new edition of its annual feature – TRENDING NOW – where we present the strategies and views of a cross-section of industry leaders as they go about reclaiming lost time and market opportunities and build for a stronger future, armed with the lessons of the pandemic period.
Over the next few weeks, Trending Now will bring insights from industry leaders on how their organisations are gearing up to seize the opportunities in 2022, break through the Covid disruptions and find growth and remain resilient.
In conversation with Adgully, Gaurav Mangla, CEO and Co-Founder, Pickrr Technologies, speaks about the emerging trends in the Indian logistics sector in 2022, the massive influx of new players in the D2C space, the increased drive for digitalised information and processes and more.
What are the trends that you expect to dominate in your sector in 2022?
The Indian logistics sector is undergoing a paradigm shift with the ever-changing consumer behaviour and patterns. The Covid-19 pandemic became the point of origin for changing trends further propelled by the lockdown, creating a huge demand within the e-commerce space. With frequent product returns and failed delivery efforts, the sector needs to see proficiency in improving reverse logistics services. Therefore, logistics companies are in a state of constant innovation to better adapt the trends such as:
Evolving the changing shopping habits: With the growing Internet penetration and smartphone usage, consumers are rapidly shifting to online shopping. To provide the best customer experience, the need for efficient logistics will increase.
Booming D2C market: Due to the massive market reach, businesses are rapidly adopting the D2C model. This sector is expected to touch $100 billion by 2025, which means more and more brands would require end-to-end logistics solutions and warehousing solutions in the coming years.
Better last mile operations: The e-commerce giants are going toe-to-toe in reaching more customers, resulting in constant competition for better last-mile operations. Hence, logistics companies are constantly devising new technologies and strategies to catch up with the raised bar, ensuring speedy deliveries and the best customer experience to their end consumers.
Smoother reverse logistics: The recurring trends in failed deliveries and product returns have steered the need to optimise reverse logistics services. Big companies are leaving no stone unturned to enhance customer satisfaction. Hence, they will continue to invest in big data to accomplish efficient, customer-centric reverse logistics and reduce the fleet costs arising from it.
Robust network of on-demand fulfillment centers: With new players in the market demanding smooth logistics and an ever-increasing consumer pool that requires super-fast deliveries, the need for fulfillment centers are constantly growing. These facilities can provide convenient storage solutions and reduce shipping costs, ensuring that sellers reach their customers within 1-2 days.
What challenges and new opportunities do you see emerging in the year ahead?
Even before the pandemic, there was a global drive for digitalised information and processes. Impulsive buying habits of consumers are also prompting businesses to quicken their deliveries, even ahead of the promised time, to create an exemplary customer experience. This pressure has become more urgent than ever before, and every company that desires to participate in this global market must quickly adapt, change, and abandon old practices.
- Big Data Management
A report by the Competition Commission of India concludes that the Indian e-commerce industry is the fastest growing globally, with an annual growth rate of 51%. This growth is due to the increased demand of consumers and the entry of new brands, including D2C. As more online shoppers join the league, this data gets larger in volume. With around 190+ million online shoppers placing orders via various platforms, managing this data is a mammoth task.
Utilising the analytics smartly can identify consumers’ purchasing patterns and then further be classified as per the need of a particular seller and end consumers. With this, sellers can provide more options to end customers with various options based on the shopping requirements and interests of the customers.
- Faster Delivery
With the surge in online shoppers, there is an unprecedented increase in the demand for faster deliveries. E-commerce players offer options for same-day delivery for greater customer satisfaction. Some big players like Amazon and Flipkart are equipped with the infrastructure required to provide this, but smaller D2C players are not able to catch up. Moreover, the faster last-mile deliveries continue to be a persistent challenge for most of the emerging brands.
Logistics players have a massive opportunity to fill this gap and disrupt the industry with technology and end-to-end fulfillment networks across the country to enhance the speed of last-mile deliveries, leading to the best customer experience.
- Warehousing
According to a study by CARE Ratings, 90% of warehousing space in India is under unorganised players. However, lack of skilled workforce, poor material handling, obsolete handling equipment, inadequate technology penetration are also amongst the key challenges in this segment.
The current opportunities propelled by organised private players are standardising the warehouse segment, leading to significant improvements. There is a massive requirement for technology to be allocated within warehouses for better inventory management, faster package allocation, and swift deliveries.
How is this year’s turnout expected to be in this sector as compared to the last two years? How strong will this sector’s growth and recovery be compared to the last two years as well as the pre-Covid period?
During the epidemic, businesses in this sector encountered massive interruptions, emphasising the importance of streamlined, effective logistics operations. After significantly improving their processes in the last two years to withstand the unpredictable market environment, logistics businesses are now continuously adapting with emerging ideas to stay competitive and on the cutting edge. Due to the vast consumer reach and enhanced engagement, many Indian brands and sellers are quickly switching to the D2C business model.
In terms of recovery, despite low consumer spending, economic slowdown, and uncertainty induced during Covid-19, India’s e-commerce order volume increased by 36% in the fourth quarter of 2020. The personal care, beauty, and wellness segment were the biggest contributors to this growth. In 2021 with significant changes in businesses and a spree of new technologies, the dependency of Indian consumers on brick-and-mortar shops reduced due to the emergence of online stores. The market is expected to be driven by growth in the manufacturing, retail, FMCG, and e-commerce sectors.
The massive influx of new players in the D2C space implies that more businesses would seek platforms that provide end-to-end logistics and fulfillment services in the coming years. Development of logistics-related infrastructures such as dedicated freight corridors, logistics parks, free trade warehousing zones, and container freight stations is also expected to improve efficiency and has shown a sizable increase over the last two years.