The logistic business of Indian e-commerce is one of those lucrative opportunities, which no one wants to miss. Currently valued at $0.46 billion, the industry is all set to expand to $2.2 billion by 2020, and Amazon wants a big slice of the pie.
As per reports coming in, Amazon’s own logistics business arm, Amazon Transportation Services or ATS is now open to deliver e-commerce orders placed on other portals as well, which includes Flipkart and Paytm.
Interestingly, Flipkart has its own logistics arm called Ekart, which delivers e-commerce orders from other portals and apps such as Paytm. This way, ATS and Ekart will now directly compete against one another.
Will logistics and last mile delivery turn into a parallel industry of its own, with its own rule and market dynamics? Will the problem of logistics bind ‘em all into one cohesive unit?
We explore…
Amazon Wants To Expand Into Logistics
As of now, Amazon Transportation Services (ATS) serviced exclusively for delivering FBA or Fulfilled by Amazon orders. In FBA, sellers parked their products at Amazon India’s warehouses, and whenever a delivery for such orders came, ATS handled the logistics part.
Now, reports are coming in, that ATS is all set to diversify their operations, and will deliver orders placed on other e-commerce portals as well, not just Amazon’s FBA.
To start with, ATS has started delivering for orders coming via 300 sellers, who are on Amazon, but not with FBA. Soon, ATS will start delivering for those sellers, who are selling both on Amazon and Flipkart.
And gradually, ATS will open up for sellers who are only on Flipkart and other e-commerce portals such as Paytm and Snapdeal.
As per an unnamed industry executive, “Amazon wants to build ATS into an independent logistic service which competes against Flipkart’s Ekart and other independent logistic services like Blue Dart and FedEx. It has started with its own sellers, but eventually will even look at offering logistic services to brands and other businesses. ATS has recently hired a lot of executives from leading courier companies..”
Another executive shared that Amazon now wants to ‘control’ each and every segment of e-commerce value chain, and expansion into logistics is part of the process.
Changing Dynamics Of Logistics Sector
In case Amazon jumps full time into logistics business, then the whole market will witness a major shake-up.
Existing and traditional companies like BlueDart, DTDC and FedEx, which are playing a major part in delivering products for sellers across all portals, including Amazon, will witness a major drop in revenues.
Flipkart’s Ekart, which is the logistics arm of Flipkart, has already made major inroads into the logistics and shipping business. Last year, they opened up their platform and started delivering orders for Paytm as well.
Right now, they are delivering 90% of the orders for their own sellers, and 10% for other portals. Ekart too is aiming to snatch business from existing companies such as DTDC and Blue Dart.
It seems that after e-commerce, it is the logistics market which will turn into the battleground for Flipkart and Amazon in India.
Do you think such rivalry and competition will introduce innovation into the logistics sector? Do let us know by commenting right here!