Balakrishnan, Business Standard
11 September 2014
private equity (PE) investors are gearing up to participate in
the e-commerce growth story. In recent past, back-end logistic
players have been on radar of PE players. India's e-commerce market,
which is expected to reach $20 billion by 2020, has seen the presence
of five-six large organised specialised logistics players.
Devangshu Dutta, CEO of Third Eyesight, a retail consultancy,
said: "While building a retail and consumer brand carries
a potentially high reward, they are also high risk as shown by
the attrition among e-commerce companies. On the other hand, no
matter which specific front-end companies survive, back-end services
and vendors will be needed by most of them."
Logistics services company Delhivery has raised Rs 212 crore
led by Multiples Alternate Asset Management in series C fund-raising,
with the participation of existing investor Nexus Venture Partners.
Another Delhi-based e-commerce logistics solutions provider,
Ecom Express, raised Rs 100 crore ($16.5 million) from Peepul
Capital earlier this week.
Srini Vudayagiri, investment director at Peepul Capital Advisors,
said: "Any business, which is part of the e-commerce space,
will also see a significant momentum in future. Logistics, which
contributes 9-10 per cent of the overall e-commerce market, will
have a huge potential when e-commerce will touch $20 billion in
a few years."
According to him, specialised e-commerce logistics providers
have an upper hand over the other normal business-to-business
logistics players, because collection of cash (in case of cash-on-delivery),
returned items and delivery need special attention compared with
According to a recent report by Accel Partners, online shopping
of physical goods will increase from $2 billion in 2013 to $8.5
billion 2016, while online shoppers will double to 40 million
in 2016 from 20 million in 2013.
To tap the fast-growing market, logistics players are all set
to grow rapidly with the latest round of PE funding. T A Krishnan,
co-founder and CEO of Ecom Express, said, "From handling
five million packages in FY14, we plan to grow to 20 million packages
by FY15." The company will increase the number of employees
from 3,000 to 10,000 in the next five years. It will also expand
into 500 cities over the next two years from 100 cities at the
Recently, Delhi-based Holisol Logistics, a provider of back-end
logistics services to e-commerce companies, received $1.5 million
in venture funding. Holisol's customers include Fab Furnish, FreeCultr,
Jabong and OfficeYes, Pepperfry and Urban Ladder.
"One of the factors in favour of back-end companies is
modest valuation multiples compared to emerging retail or e-commerce
companies, and a back-end vendor with a reasonably diversified
customer portfolio is a lower risk investment over the mid-to-long
term," Dutta added.
However, competition will get tough for specialised players as
major logistics players such as DTDC Courier, Gati (Gati Connect),
Blue Dart and Aramex are already in the e-commerce business with
their new divisions. Last year, DTDC Courier & Cargo set up
DotZot, a separate unit for providing logistics support to online
retail service providers. Similarly, eKart, the in-house logistics
arm of Flipkart, had also extended its services to other sellers.
(Published in Business