Professional Documents
Culture Documents
Delivers
New
Competitive Advantage
to Etail Revolution
Contents
Introduction.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Etail boom.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Factors driving warehouse consolidation.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Multi-channel to Omni-channel.. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 6
Infrastructure.. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .10
Pricing.. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .10
Introduction
The new Etail marketplace is demanding that
deliveries be faster and more efficient. Most Etailers
are going back to their drawing board to work on their
warehousing efficiencies. While the fundamentals of
warehousingreceiving, put-away, picking, packing
and shippingremain consistent, the location of the
warehouse and its ability to handle the demands of a
modern storing and forwarding facility is proving to
be a key factor to achieving this new demandspeed.
Etail companies in India are moving from a traditional
warehousing techniques which used the glorified,
regulated era godowns to a modern warehouse
which offers all facilities such as safety & security,
storage efficiency, ability to pick easily and quick
trucking.
Etailers are typically looking at land banks of about
YEAR-ON-YEAR
INDIA WAREHOUSING AND E-COMMERCE
SECTOR DEMAND
(Million sq. ft.)
(%)
12
30%
10
25%
20%
15%
10%
5%
2012
2013
2014
2015
DISTRIBUTION OF
E-COMMERCE LEASING ACTIVITY
BY CITY
3%
4%
6%
13%
17%
22%
33%
0%
NCR
Ahmedabad
Mumbai
Kolkata
Bangalore
Others
Hyderabad
Source: CBRE Research, Q1 2016. Approximate figures only (for grade A space).
Etail Boom
57% CAGR from 2009 to 2014 but
in 2015 alone it grew an estimated 3 times the previous year logging
Indian e-tailing market has grown by
18
16
14
12
10
8
6
4
2
0
128.5
98.4
100
80
53.8
27.9
140
120
73.5
19.9
(Million)
60
39.1
40
20
Nuber of Buyers
Retail Spend
(USD Billion)
0
2012
2013
2014
2015
2016
2017
2018
5
Though, 80% of this is controlled by Flipkart and Snapdeal, with
Amazon India upping its ante and Alibaba looking to enter Indian
market, e-tail sector is on fire.
The share of e-commerce is expected to jump from 2% in 2014 to
11% in 2019, while the share of physical, organized or modern retail
is expected to fall from 17% to 13%, according to Think India. Think
Retail, a report by the property consultant Knight Frank India Pvt.
Ltd and Retailers Association of India (RAI).
17%
11%
13%
2%
2014
2019
Driving Factors
Multi-channel to Omni-channel
COD
44%
10%
Free Delivery
Next Day Delivery
23%
Insurance Cover
Easy Returns
Driving Factors
A warehousing model
well suited for India
The key to a new new modern and efficient warehousing is the
integration of processes, information systems, infrastructure
including property, to enable the etailer to meet customer demand
from whatever location is positioned to provide the best customer
experience.
Most e-retailers in India are adopting the hub and spoke distribution
model. They are setting up regional fulfillment centres (hubs) in key
cities such as Delhi, Mumbai, Chennai, Kolkata and Bangalore, and
smaller hubs in tier II cities such as Ludhiana, Hyderabad, Ahmedabad
and Jaipur. The ramp up plan involves the setting up of smaller hubs
in most state capitals and prominent consumption centres. This
network is supported by multiple local centers (spoke) in various
metros to fulfill the time definite service offering promoted by most
e-tailers as a differentiator. Large operators typically have a total of
810 hubs spread across key cities.
The average space uptake by hubs stands in the range of
Warehouse hotspots
Many large firms are reportedly evaluating options for
warehouses across 8 Indian cities Ahmedabad, Bangalore,
Chennai, Delhi NCR, Hyderabad, Kolkota, Mumbai and Pune.
Together these cities account for 42% of Indias GDP. These
cities are considered natural primary warehousing hubs in India.
NORTH
30% - 35%
Consumer Market
Geometric CG
EAST
5% - 20%
WEST
Consumer Market
25% - 30%
Consumer Market
SOUTH
25% - 30%
Consumer Market
10
Pricing
Can be tricky with real estate being largely a state subject without
uniform pricing guidelines. With continuous developmental
and close to rail network and not to mention the local airport.
Aligning with a partner which brings in these expertise as part of
their support team and having land bank is an added advantage.
Infrastructure
Understanding and tracking closely government infrastructure
projects and identifying land parcels close to strategic points is
key. Knowing and understanding a Citys CDP (Comprehensive
Development Plan) which details the local governments plans
to develop the citys infrastructure that usually aligns with state
and union governments initiatives is an invaluable asset.