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Supply chains & escalation of hyper local startups, a boon for investors!
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Thursday, 24 December, 2020, 08 : 00 AM [IST]
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Lalit Chauhan
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The last decade has seen a substantial growth for the Indian startups and yes, why not, the e-commerce sector is booming and hence the supply chains. The ‘Make in India' and ‘Startup India' campaigns and the latest ‘#vocalforlocal’ campaign by the government have just added fuel to the already flourishing business.
When it comes to logistics then these are just in vogue! Big brands like Amazon, Flipchart, etc., all these businesses are dependent on logistical needs and that’s it, here comes the hyper local delivery systems. From ordering a smartphone to a new couture or simply ordering food from your favorite restaurant, every online addition has the back from a supply chain sector that is making the quick delivery possible.
So now the question is? Is India's technology driven logistics startups the next big potential plan for investors?
And the answer is yes! The statistics reveal it all!
Currently, 13 per cent GDP contribution in India is from the supply chain sector, which clearly signals the potential of leapfrog the $200 billion market by benefiting from technology driven hyper local startups.
The Covid-19 pandemic has certainly increased consumer’s dependence on the hyper local and on-demand services multifold and this has become a lifestyle now. In the day and age of purchasing everything online and getting stuff delivered at the doorstep in no time, the indication of shift of footfalls from store to hyper local is quite predictable even after the pandemic.
So hyper local startups especially when they club the logistics becomes the most potential business in the prevailing age. With PM Modi’s speech earlier in the year, which emphasised on a stronger supply chain and the present government’s focus is definitely a push to the logistics and supply chain sector. And it won’t be wrong to say that it’s the perfect time that more and more hyper local and logistics startups pop up and grow by leaps and bounds in terms of ROI.
In the era of instant, customers have a plethora of hyper local startup services at their disposal. Starting from Swiggy and Zomato for on-demand food delivery to the grocery services of Big Basket and Grofers and medicine delivery startups like Medlife, name any service and you have your thing within a matter of hours or even minutes.
Today, with the blink of an eye we have everything we can demand for and it is no more restricted to urban areas, yes. Apart from the big players who operate pan-India, the hyper local ecosystem has started Deeping its roots with plenty of city-specific startups and supply chain partners. Considering the fact, the Indian customer who is in no mood to venture out of his house or workplace and has become accustomed to buying products online and instantly, there is and will always be a room for escalation of the hyper local delivery market. All that is required would be the innovative quotient to complement the ever evolving demands of the digital age consumers.
And nevertheless, the wrath of the pandemic turned out as a bigger opportunity for the e-commerce and supply chain sector. In just a few months the entire retail paradigm swapped from malls or kirana stores and e-commerce to the hyper local economical units.
Yes, the economy plunged because of the pandemic and businesses had no option but to rely on locally available produce to sustain the sale and demands. The age old trust of consumers with their pet local stores and the comfort of stores being in the neighborhood also made the hyper local model or rather the hyper local e-commerce sector work wonders in the current challenging times as it helped cater all the consumer needs with ease and within vicinity both in metro and non-metro cities.
In an interview, a user of hyper local platforms and an entrepreneur, Siddharth Marupeddi, CEO at ULearn said, “With NBFCs infusing huge capital into the market as short loans (unsecured and commodity loans), the setup costs to start an MSME is comparatively quite less today. If we look at lending apps online advertisement with the mushroom growth of credit card usage for shopping, we will witness that an immense growth of Indian e-commerce in next five years is inevitable.”
Additionally, it is not just the hyper local grocery delivery businesses but also many of the startups have benefited and have gained significant profits during these times. The best example could be of Urban Company, a multi-service providing platform, the company reveals that it bounced back with a 2.5 times jump since the lockdown restrictions were leveraged. And the interesting part is, 80 percent sales were from the first time users.
“As the growth starts coming back in e-commerce, there will be increased deal activity in the logistics space. Venture capital investors have started thinking beyond normal categories, which is an evolution of the market. India’s logistics sector contributes 13 per cent to GDP, signaling it could benefit from technology-driven startups that have the potential to leapfrog the largely unorganised market.When a country enters a phase of rapid economic growth, the logistics industry sees significant cost escalation.” said Aashish Bhinde, executive director at Avendus.
Avendus expects that by 2020, e-commerce logistics startups will dominate India’s emerging logistics sector with a market size of $6.6 billion, followed by hyper-local delivery services ($3.9 billion) and marketplaces that connect truckers with clients ($750 million).
So the bottom line is hyper local in a wink has become the rumble of the mob and has stirred the curiosity and attracted a significant chunk of entrepreneurs who were in search of plans and ideas that could make them stand out! And undoubtedly, hyper local startups with a supply chain back have become the strongest contenders amongst the various industry verticals that are jostling for pole positions in India’s growing e-commerce economy. And they have a definite growth journey ahead!
(The author is co-founder and CEO of Bharat Eat)
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