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Dedicated LSPs gaining strong hold over traditional LSPs in e-commerce retail industry of India: Bonafide Research
Better service, investment in technology infrastructure, wider range of product offerings, competitive pricing, fundraise from global investor and their ability to reimburse cash quickly has provided e-commerce focused LSPs to munch bigger pie of e-commerce market as compared to the traditional LSPs. The India e-commerce logistics industry is growing at a rapid rate given the funding by global investors. The e-commerce focused LSPs have gained huge traction in the last couple of years, for example players like Delhivery and Ecom have already crossed major revenue share individually. These emerging LSPs providing complete logistics solution to e-retail industry includes services like first mile, last mile, COD collection, remittance, parcel tracking, etc. These e-commerce focused LSPs are continuously adopting new technologies and constantly making efforts to welcome new requirements given by e-commerce companies. Meanwhile, traditional LSPs have an advantage of established network and reach, along with their experience and expertise in providing logistics service pan India. But due to lack of pattern followed to reach the client of e-commerce, along with the lack of sales techniques and IT adoption, has put these traditional LSPs to lose their ground on e-commerce logistics platform.
According to the research report "India E-Commerce Logistics Market Overview, 2028," published by Bonafide Research, the India E-Commerce Logistics market is anticipated to grow at more than 16.88% CAGR from 2023 to 2028. Increasing e-retail industry has augmented the demand of LSPs for distribution and reach. In distribution channel, e-commerce package in India is handled by at least 18 people before it reaches its final destination, whereas in a developed country a package would be touched by about 3-5 people. Earlier to e-commerce, the domestic express service market was largely unorganized and fragmented. The existing traditional 3PL players had limited capabilities to cater to time sensitive delivery and service levels demanded by e-commerce players, which resulted into captive logistics arms being seeded by the large e-com players. Maximum of deliveries for Amazon and Flipkart are executed through their respective captive logistics entities. In last 3-4 years, 3PL players have emerged to take advantage of scale and efficiency through a technology first approach. Within the 3PL LSP market, e-commerce focussed players like Ecom Express, Delhivery and GoJavas have more than 30% market share. Both types of LSPs, captive and third party, are looking to expand their capabilities through calculated investments. Also, large e-commerce vendors have made strategic investments in other logistics players in this critical market and have invested in start-ups too. In complex categories such as furniture, jewellery and grocery, e-commerce players still largely rely on captive logistics.
In e-commerce logistics, last mile and line haul contribute major part of the logistics cost for players. Major part of line haul is by air due to time sensitive nature and service commitment. E-commerce growth over the next few years will be driven by demand from tier-II cities and beyond. Shipment volume will increase majorly in the forecast period. The challenge is that the demand from tier-II cities and beyond will be highly disaggregated because it will be originating from more than 4,500 small cities and town. Building a scalable and efficient logistics network for such scattered demand and supply will require innovative business models from logistics players. Companies in this report are divided into three sections: Gati Limited, Blue Dart Express Limited, FedEx Express Transportation & Supply Chain Services (India) Pvt. Ltd., Safexpress Private Limited, Future Supply Chain Solutions Limited, First Flight Couriers Limited, Aramex India Private Limited and Indian Postal Services are major traditional logistics service providers in India.
The surge in online shopping, particularly in Tier 2 and Tier 3 cities, has created a strong need for efficient, agile, and scalable logistics networks. The rise of digital-first consumers, fueled by affordable smartphones and low-cost internet, has expanded the e-commerce customer base and created expectations for rapid, reliable, and trackable deliveries. Transportation remains the backbone of the e-commerce logistics sector, accounting for the largest revenue share. However, warehousing and inventory management services are becoming increasingly critical as companies establish strategically located fulfillment centers to shorten delivery times and handle rising volumes of orders. The growth in demand for same-day and next-day deliveries has prompted logistics providers to invest in fleet expansion, route optimization, and last-mile delivery solutions. Innovations such as AI-powered sorting, automated fulfillment, and real-time GPS tracking are enhancing efficiency and customer satisfaction across the value chain. Government initiatives like the National Logistics Policy are also playing a pivotal role by streamlining supply chain infrastructure, promoting multi-modal logistics networks, and aiming to reduce logistics costs from the current 13–14% of GDP to global standards of around 8–9%. These policy frameworks, along with increased private sector investments, are enabling logistics firms to expand their operational reach and improve service reliability.
According to the research report "India E-Commerce Logistics Market Overview, 2028," published by Bonafide Research, the India E-Commerce Logistics market is anticipated to grow at more than 16.88% CAGR from 2023 to 2028. Increasing e-retail industry has augmented the demand of LSPs for distribution and reach. In distribution channel, e-commerce package in India is handled by at least 18 people before it reaches its final destination, whereas in a developed country a package would be touched by about 3-5 people. Earlier to e-commerce, the domestic express service market was largely unorganized and fragmented. The existing traditional 3PL players had limited capabilities to cater to time sensitive delivery and service levels demanded by e-commerce players, which resulted into captive logistics arms being seeded by the large e-com players. Maximum of deliveries for Amazon and Flipkart are executed through their respective captive logistics entities. In last 3-4 years, 3PL players have emerged to take advantage of scale and efficiency through a technology first approach. Within the 3PL LSP market, e-commerce focussed players like Ecom Express, Delhivery and GoJavas have more than 30% market share. Both types of LSPs, captive and third party, are looking to expand their capabilities through calculated investments. Also, large e-commerce vendors have made strategic investments in other logistics players in this critical market and have invested in start-ups too. In complex categories such as furniture, jewellery and grocery, e-commerce players still largely rely on captive logistics.
In e-commerce logistics, last mile and line haul contribute major part of the logistics cost for players. Major part of line haul is by air due to time sensitive nature and service commitment. E-commerce growth over the next few years will be driven by demand from tier-II cities and beyond. Shipment volume will increase majorly in the forecast period. The challenge is that the demand from tier-II cities and beyond will be highly disaggregated because it will be originating from more than 4,500 small cities and town. Building a scalable and efficient logistics network for such scattered demand and supply will require innovative business models from logistics players. Companies in this report are divided into three sections: Gati Limited, Blue Dart Express Limited, FedEx Express Transportation & Supply Chain Services (India) Pvt. Ltd., Safexpress Private Limited, Future Supply Chain Solutions Limited, First Flight Couriers Limited, Aramex India Private Limited and Indian Postal Services are major traditional logistics service providers in India.
The surge in online shopping, particularly in Tier 2 and Tier 3 cities, has created a strong need for efficient, agile, and scalable logistics networks. The rise of digital-first consumers, fueled by affordable smartphones and low-cost internet, has expanded the e-commerce customer base and created expectations for rapid, reliable, and trackable deliveries. Transportation remains the backbone of the e-commerce logistics sector, accounting for the largest revenue share. However, warehousing and inventory management services are becoming increasingly critical as companies establish strategically located fulfillment centers to shorten delivery times and handle rising volumes of orders. The growth in demand for same-day and next-day deliveries has prompted logistics providers to invest in fleet expansion, route optimization, and last-mile delivery solutions. Innovations such as AI-powered sorting, automated fulfillment, and real-time GPS tracking are enhancing efficiency and customer satisfaction across the value chain. Government initiatives like the National Logistics Policy are also playing a pivotal role by streamlining supply chain infrastructure, promoting multi-modal logistics networks, and aiming to reduce logistics costs from the current 13–14% of GDP to global standards of around 8–9%. These policy frameworks, along with increased private sector investments, are enabling logistics firms to expand their operational reach and improve service reliability.
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