Importance of logistics in e-commerce

In 2016, the World Bank’s Logistic Performance Index ranked India in the 35th position.

- Shinjini Mukherjee

This was a significant improvement from 2014 when India ranked 54th in the same list. The huge jump was an indication of the boom in the logistical sector and the ranking further reinforced the growth by creating positive perception among investors. According to the Economic Survey of 2017-18, “With the implementation of GST, the Indian logistics market is expected to reach about $215 billion in 2020, growing at a CAGR of 10.5%.”

Internet - the new driver of growth

Growth in a modern economy is accompanied by a corresponding growth in the average speed of logistics. The reasons for this correlation are multiple. For one, resources are distributed unevenly over space. Secondly, all sellers in the market aspire to expand their market share – a seller sitting in New Delhi would be happy enough to have its customer base in Kolkata as well. Put simply, the economy demands the service of logistics in all stages – to move resources to factories, to take the finished products to the market, and then to take products from retailers to customers. This entails a demand for faster, cost-effective and efficient movement of goods across the stages of production and distribution, bringing about a retail boom. Therefore, the higher growth rates of Indian economy accompanied by corresponding expanding penetration of internet access resulting in an unimaginable speed of communication has created a huge demand for logistic services in the country. Specifically, internet access has created a virtual market place – the e-commerce giants – where millions of buyers and sellers interact to strike the best possible deals. And logistic plays the key role in ensuring the delivery of goods from one end of the chain to the other. Entire industries are thriving with complete reliance on GPS connectivity.