Companies

Revenue boost for intra-city logistics start-ups as demand from Tier -2, -3 markets grows

Yatti Soni | | | Updated on: Nov 05, 2021
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During the festival season, all major e-commerce brands reported significant growth in new customers from these towns

Growing e-commerce demand in Tier-2,-3 markets has doubled revenues for intra-city logistic start-ups like LetsTransport and COGOS, which act as logistic fleet (trucks, three-wheelers) providers to companies like Amazon, Flipkart, Grofers and BigBasket.

LetsTransport claims that a significant portion of the company’s growth has come because of the uptick in deliveries to Tier-2, Tier-3 markets. “We have grown more than 2x -3x in revenue over the last year and 50 per cent of this growth came from tier-2-3 markets,” Pushkar Singh, CEO and co-founder LetsTransport, told BusinessLine .

Prasad Sreeram, CEO and co-founder, COGOS, said the company reported $4-million revenue last year and is seeing a 100 per cent growth this year, fuelled by the company’s presence in Tier-2,-3 and beyond.

In the festival season, all major e-commerce brands reported a significant growth in new customers from Tier-2 and Tier-3 towns. Global e-commerce giant Amazon recorded that 79 per cent of new customers during its month-long festival sale, came from towns like Ernakulam, Guntur, Krishna, Godavari and others.

Value e-commerce brand Snapdeal reported a 91 per cent growth in demand from Tier-3 cities compared to last year during its month-long festival sale. It added that 58 per cent of the orders came from Tier -3 cities, while Tier-2 and Tier-1 accounted for 15 per cent and 27 per cent of the order volumes respectively.

Delivery partners

As e-commerce companies drastically scale up their network, the logistics firms also have had to invest in customising their solutions and fleets to match the demand.

Singh noted that in the past four to five quarters, LetsTransport has been cross leveraging its learnings from delivering in Tier-1 markets. The company has also made significant investment in learning and development of the delivery partners in these cities. “We have training videos on our application and have made bunch of product modifications to cater to tier-2, -3 markets like vernacular language support etc. These are few things which have helped in the penetration of entire e-commerce in tier -2, -3 as a market, at least from the supply chain side.”

Infra challenges

Sreeram added that the only challenge the company faced initially in scaling into these markets was inculcating the DCO (driver-cum-owner) concept in Tier-2 and-3 cities. The company had to conduct an education programme for its delivery partners, along with upgrading its technology to support the growth of demand. The company had to increase hiring at a huge scale to meet the demand. Talking about the infrastructural challenges in these markets, Singh said while traffic is a challenge in Tier-1 cities, poor address mapping becomes a challenge in Tier-2 and beyond cities.

“ It becomes a challenge for a new delivery partner to find the location and also for us to code in the product. So we have to essentially ensure that the delivery partners/truck owners that we are onboarding are aware of these localities. In Tier-1, most delivery partners are already familiar with societies/addresses because the deliveries have been happening for years now, but in Tier-2 and beyond that knowledge base is yet to be built among delivery partners,” he added.

Published on November 06, 2021

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