India | ME | SEA Subscribe to Newsletter  Leadership Index 

Jun, 2022     

The 3PL Frenzy: What’s Next After Now?

The total hyperlocal shipment volume will see a staggering 30X growth by 2027 as more players emerge to support this booming sector.


In April last year, we rightly predicted the outlook for India’s third-party logistics (3PL) players. We knew right from the get-go that the market would witness unprecedented growth; we also captured how the growth of eCommerce will inevitably fuel the rise of 3PL players.

Given how exciting this space is, we decided to revisit this segment. Well, we were not disappointed in what we saw! Our latest findings suggest that the growth might be swifter and much bigger. Mukesh Kumar and his team show us how great the numbers look and what is driving the market’s growth:

1. With eCommerce in India growing steadily, shipment volumes are only increasing, with hyperlocal comprising more than half of the market share

 

Due to an increased demand for faster and more reliable logistics, 3PL is becoming the default choice for many businesses, especially when getting products from the production line to the customer. The fact that hyperlocal delivery is an efficient and truly potent way of delivering orders to customers at the earliest is a huge reason why this segment is rising. Urbanization, adoption of internet usage, increase in smartphone ownership, and changing consumer preferences are all the other causal factors contributing to the demand and growth of hyperlocal. By 2027, hyperlocal will constitute 64% of the total digital commerce shipment split.

2. And of course, 3PL players are innovating themselves given how hyperlocal is growing at such a fast space, while platforms are increasingly outsourcing their deliveries to these 3PL players.

There’s a good reason why eCommerce players are opting for 3PL services. One important reason is that 3PL partners have an increased reach beyond just metros. Secondly, given how 3PL players have supply chains across road, rail, and air, they can ensure speed and flexibility of delivery. Other key value propositions include optimized costs and tech-infusion within their supply chain. These players are also well equipped to manage demand uncertainties during festive sales, weekend order volumes, and more. Additionally, eCommerce players are increasingly outsourcing delivery services (especially food and grocery) as hyperlocal parcel delivery is now commoditized. In turn, 3PL Players are leveraging technology to serve the burgeoning hyperlocal delivery market.

3. The total hyperlocal shipment volume will see a staggering 30X growth by 2027 as more players emerge to support this booming sector. During the same period, the 3PL share will grow from 34% to 42% of the market share

 

The growing prominence of e-commerce platforms has thrown more logistics challenges for third-party logistics. In the race to improve their logistics service, these platforms are pushing their digital platforms to new levels in terms of scale, efficiency, and user experience. With their reach and resources, they are also setting themselves up to expand past the logistics industry and directly into new markets in the future, where they can add new capabilities and expand their customer base in new ways. Undoubtedly, a 30X growth by 2027 is in the books for this exciting segment!

4. Although already on a growth trajectory, 3PL’s share in the hyperlocal segment, especially within food, grocery, and pharma, are set to experience the highest flourish

 

Today, as niche players, particularly from the D2C space, enter the market and even tap into tier 2 and tier 3 areas, they have discovered that hyperlocal delivery services provided by 3PL players are the most convenient way to deliver their products, reduce delivery time, and ensure last-mile delivery. Of late, we witnessed a spike in the number of food and pharma players who are outsourcing their delivery to volumes to leading 3PL players. The convenience and speed that it offers is a key reason why customers love it too and why the segment is only bound to soar upwards!

It goes without saying that 3PL players are helping brands succeed, while adding consumer delight to the mix. These 3PL players are taking order fulfillment to a whole other level and are bringing waves of revolution within the traditional logistics space. We are excited to see what this space holds for us in the coming years!