New operating models to pave way for next wave of e-commerce growth: Alvarez & Marsal

Mumbai (Maharashtra) [India], Aug 27 : The e-commerce market in India is poised for annualised growth of more than 28 per cent in the next five years, given the favourable adoption trends and the growth seen in mature markets, global professional services firm Alvarez & Marsal said on Thursday.
This growth is predicated on the growth of its enabling ecosystems, it said in a white paper prepared in collaboration with CII Institute of Logistics.
The e-commerce landscape has grown manifold over the last decade, accounting for less than one billion dollars in 2010 to more than 30 billion dollars in 2019. This is a result of access to goods country-wide, made possible by the growth in capacity and network of logistics companies.
"While the bulk of e-commerce volumes come from top 30 cities, more than 60 per cent of e-commerce volumes are likely to come from tier two and three cities in the next five years," said Manish Saigal, Managing Director of Alvarez & Marsal India.
"It is imperative for e-commerce businesses to build their seller base and delivery reach in smaller towns," he said.
Senior Director Sudeep Mehrotra the past five years in India have been about e-commerce channel becoming a mainstream channel (as important as traditional and organised retail) for companies to design their sales strategy.
"The next five years will be about gaining meaningful value share in the e-commerce delivery market size. For logistics industry incumbents and investors, these ideas offer the next wave of growth," he said.
The white paper said e-commerce companies need to increase the selection (stock keeping unit width and depth) available online, both to increase the local seller base to deliver at the most optimal costs and to penetrate new categories to increase the overall market available to them.
This growth, therefore, will have to be enabled by logistics partners offering them deeper and deeper pickup and delivery networks.
To service this, said the white paper, the network and capacity of logistics partners must scale up across their chain of pickup centres, fulfilment centre spaces, line haul, hubs, intracity transportation, delivery centres and delivery partners.
They will need to adapt to handle an increasing mix of complex products -- from traditional e-commerce packages (mobiles and apparel) to heavy, bulky, fragile, temperature-sensitive and perishable products while handling multiple payment modes at the customer's end.
They further need to reimagine their network to include dark stores, store to customer deliveries and composite B2B and B2C fulfilment centres.
The white paper said e-commerce companies should also look toward partnering with technology providers to offer end-to-end supply chain solutions for the emerging set of multichannel product companies.
This is now an interesting space for logistics companies and investors to review, said the while paper. While the service providers with a differentiated proposition could stand to gain going forward, there is ample market growth available for incumbents to grow and sustain.