Healthcare, fashion Net more business for logistics firms

Our Bureau Ahmedabad | Updated on February 02, 2015

E-commerce revenuefor delivery firms to rise to 40% by 2020from 15% now

Transporters and logistics companies see bright business prospects in strong demand for healthcare and fashion goods on e-commerce platforms.

Nutritional foods, workout equipment and medical goods as well as fashion products are very popular on e-commerce sites even as the country’s online trade is booming, say trade sources.

“More than traditional bulk transport or courier businesses, the express segment in e-commerce will see faster growth. We are focusing on next-gen requirements in e-commerce. The growth will come from healthcare, print and pack goods, fashion accessories and phama,” Ashok Shah, Chairman of Vxpress Group, told BusinessLine.

The company, which operates mainly in transport and logistics services, is expected to touch ₹750-crore turnover this year. According to a report by audit firm KPMG in India, in 2013, e-commerce accounted for 15-20 per cent of the total revenues for some of the big logistics companies, and this is estimated to increase to 40 per cent by 2020.

Dedicated teams

“Logistics companies in India are warming up to the opportunity that the e-commerce industry holds for them. Consequently, they are considering deployment of dedicated teams to cater to this industry segment. However, due to low pin code penetration, last mile connectivity remains a distant dream,” stated the report.

Of the overall e-commerce market, e-tailing comprises 16 per cent, second largest after online travel at 71 per cent and followed by financial services at 6 per cent.

Indicating the potential for the logistics delivery market in e-commerce in India, the KPMG report said the e-tailing market will grow from about ₹3,300 crore to around ₹3.57 lakh crore by 2020. Similarly, the logistics market from e-tailing will increase from ₹200 crore to ₹14,300-17,500 crore. However, the segment faces some challenges as well.

“First, there are issues of 10-15 per cent goods getting returned because of quality and price issues. Secondly, the VAT structures of different States make it difficult to operate for a logistic player dealing in e-commerce,” said Shah.

After the introduction of the Goods and Services Tax, which will replace all indirect taxes levied on goods and services in the country, business prospects would improve further, he added.

Published on February 02, 2015

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