Express players ‘unmoved’ by e-tailers’ logistics foray

As e-commerce companies such as Amazon and Flipkart increase their focus in the logistics space, independent and logistic pure plays such as Ecom Express, DHL Express, DTDC and Allcargo Logistics — who count e-commerce players as their customers — thwart concerns on their customers becoming competitors.

They say there will be space for all to grow as the e-commerce market is quite large and it will be difficult fore-tailers to cater to the entire chain.

Ecom Express is widening its presence into the rural segment, with an aim to create a network that is “second only to that of India Post”, according to TA Krishnan, CEO and co-founder, Ecom Express

Krishnan believes companies should focus on their core and leave the non-core to others, as there are experts available.

“It also allows you to have a variable cost model rather than a fixed cost model. With a difficult funding environment now, (as an e-commerce company) I would rather put funds in my core business,” Krishnan said, adding that for a Flipkart or Amazon, presence beyond top 50-100 cities, where they have lot of volumes, may not make sense.

Buttressing his point about presence across States, Krishnan said: “By simply expanding logistics coverage to an entire State, when we test-marketed Haryana about one-and-a-half years back, our volumes jumped four times in a matter of two-and-a-half months. Almost $300 million worth of gross merchandise value got created by increasing coverage in Haryana. Our view is, by covering 23-29 States in times to come, we will cover 90 per cent of the country’s demand.”

Diverse players DHL Express, meanwhile, feels the market is large and has enough growth space for logistics players. “All the e-commerce movement, in India and in other countries, are in different stages of development. In the foreseeable future, the market is going to grow,” said RS Subramanian, Senior Vice-President and Country Manager, DHL Express India.

“They (e-tailers) will only work in this space to an extent they can manage,” Shashi Kiran Shetty, founder and Chairman, Allcargo Logistics. Nobody can manage the entire chain themselves. They want to be present and will be present, but only in parts.”

DTDC’s Executive Director Abhishek Chakraborty pointed out that there are many sellers who are listed on multiple e-retail platforms, and prefer a neutral logistics player.

Then, there are players like Truckola, who exist only in the full-truckload market, and thus do not count e-commerce players as their customers now. Truckola’s Raghav Himatsingka pointed out that while e-commerce logistics is one of the fastest-growing segments, players in the segment are yet to book profits and are like to squeeze the margins of their logistics service providers.

Recently, international media reports said Amazon has already started directly booking space to move goods on ships from Chinese retailers to its warehouses in the US. Last year, Amazon started leasing planes with its own brand, apart from having its own branded trucks.

Flipkart has invested in logistics start-up Blackbuck, and also has a logistics arm, Ekart.

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