Home Can E-Commerce Really Boost Stocks of Logistic Companies

Can E-Commerce Really Boost Stocks of Logistic Companies

Indian Logistics Sector – Facts

logistic companies►         Logistics sector encompasses a wide range of services including Transportation (air, road, sea), Storage(warehousing, logistics parks, container depots, cold chains), Distribution (courier service, e-tail deliveries), and Integrated Services (freight forwarding[1], 3PL – third party logistics[2]); 

►         India spends around 14.4% of its GDP on logistics and transportation as compared to less than 8% spent by the other developing countries;

►         According to the World Bank’s 2014 Logistics Performance Indicator, India ranks 54th in terms of logistic performance based on 6 parameters[3]. Top 10 countries include Germany, Netherland, Belgium, United Kingdom, Singapore, Sweden, Norway, Luxembourg, United States and Japan.

►         The Indian logistics market is expected to grow at a CAGR of 12.17 % by FY 2020, driven primarily by growth in the manufacturing, retail, FMCG and e-commerce sectors and the government’s make in India initiative.

►         Logistics market for the retail sector stood at U.S. $27 billion as of FY 2014. Transportation contributed the largest share (60.10%, followed by warehousing (24.50%).

►         Fragmented Industry: Unorganized players dominate the sector. Share of organized players is seen at ~8%.

►         Fastest growing vertical for logistic companies: E-commerce

►         Key Focus areas:  services for e-commerce sector including network reach, timely express delivery and standard packaging practices, multiple modes of payment collection.

Data Source:

logistic market - segment

Listed Space – Stocks of Logistic Companies

Unlisted Logistic Companies

1.       Ocean Sparkle

2.       J.M. Baxi & Co

3.       Continental Warehousing Corporation

4.       Star AgriWarehousing and Collateral Management

5.       Shree Shubham Logistics

6.       TVS Logistics Services Ltd

7.       Safexpress Pvt. Ltd

8.       Mahindra Logistics Ltd

9.       SSN Logistics Pvt. Ltd. (Delhivery)

Business Presence of Key Logistics Companies

logistic companies - verticals

Online Retail – Fastest Growing Vertical for Logistic Companies

Online retail within the E-commerce space has emerged as the fastest growing vertical for logistic companies. Currently, logistics in the online retail sector alone comprises of about 10% of the entire logistics industry. The share will increase in the coming years, as online retailers are competing not only on product pricing, but more so on shorter delivery times, which creates the biggest opportunity for logistic companies to compete with each other.  According to a study done by Technopak Advisor, online retail industry has the potential to add U.S. $5 billion annually to the income of logistics companies by FY 2021.

Some Facts on E-commerce Industry

According to Technopak Advisor, the Indian E-commerce Industry is expected to grow hundred-fold from the current U.S. $600 million to U.S. $76 billion by FY 2021 on the back of growing middle class population, higher disposable incomes and better internet penetration. The country’s growing Internet consumer base will comprise of ~180 million broadband users by 2021. The share of online retail in total retail in India is forecasted to grow from 0.1% to 5.3% by FY 2021.

indian retail market

The Logistics Practices for E-Commerce Industry

The logistics practices for e-commerce industry are significantly different from the traditional business model. To achieve success, e-tailers have to focus on ensuring that the logistic chain is as short as possible.

How Logistics Companies Charge e-commerce Companies

Logistic companies charge e-commerce companies a freight charge which differs based on the distance of shipment, weight and type of goods.

In case of Cash on Delivery, major logistics companies like BlueDart and Aramex charge e-commerce companies a transaction fee of Rs. 50 plus a percentage of the amount (about 1 % to 2%) collected as cash. DotZot, a logistic company promoted by DTDC collects either a fixed charge or 1.5-2 % of the value collected, whichever is higher. Similarly, Delhivery, another logistics service provider in the e-commerce segment, charges 1.8 % of the transaction value.

Reverse Logistic Charges: Logistics companies charge an extra Rs. 50 to Rs. 100 to e-commerce companies as return fees to ship the goods back to the merchant warehouse.

Shipping Rates Charged By Some Indian Logistic Companies


Shipping rates (Domestic)

Cash on Delivery

First Flight

Charges start @ Rs 35 per 500 gms



Charges start @ Rs 25 per 500 gms



Charges start @ Rs 21 per 500 gms


eCom Express

Charges start @ Rs. 22 per 500 gms


Go Javas

Charges start @ Rs 22 per 500 gms



Charges start @ Rs 60 per 500 gms



Charges start @ Rs 53 per 500 gms


Key constraints

[1]  Timely Delivery of the product:  speed matters in e-commerce logistics.

[2]  Focus on Rural Delivery: as the industry grows & internet expands in rural areas there would be need to focus on rural/remote area delivery. This will pose another challenge in terms of network strength as well as cost of delivering in these remote locations.

[3]  Non Availability of Customers:  delivery boys have to identify the end customer’s location and visit more than once in many cases due to non availability of customers at their home/office. All this increases the logistic cost (transportation) faced by the company.

[4]  Product Exchanges and Returns: The return policy offered by ecommerce companies is another big challenge faced by the logistic companies. 

[5]  Trusting The Delivery Boys: below are some ammusingly unexpected things received by custommers:

♦         A Vim bar in place of a Samsung Galaxy Core 2

♦         Pieces of stones instead of iPhone 4S

♦         Rs 600 heater in place of a MacBook Pro

♦         Pendrive boxes with nothing inside

Who do you blame – ecommerce company, delivery boy or the logistic company?

[1] Freight forwarding is a service used by companies which deal in international or multi-national import and export.

[2] 3PL (third-party logistics) is a provider of outsourced logistics services.

[3] [1] Efficiency of the clearance process, [2] Quality of trade and transport related infrastructure, [3] Ease of arranging competitively priced shipments, [4] Competence and quality of logistics services, [5] Ability to track and trace consignments and [6] Timeliness of shipments in reaching destination.