In the recent years, E-commerce has been the biggest driver of warehousing globally as well as in India. Globally, an additional 138 Million Sq. Mts will be required to support the e-commerce growth over the next five years. In India, It is estimated that E-commerce will consume approximately 98 Million Sq. Ft in the next five years.
E-Commerce Outlook (Global & India)
The Global online retail market stood at USD 2.4 Trillion in 2020 and is expected to reach USD 6.39 Trillion by 2024. South Korea, China, United Kingdom, Indonesia and US accounting for majority of the online sales. Indian E-commerce is expected to grow at CAGR 27% and reach USD 99 Billion by 2024 with grocery and fashion (apparels) expected to be the key drivers.
E-commerce journey in India has been a fascinating one and is still at an early stage. The Indian population has embraced E-commerce way faster than expected. With the entry of Reliance (Jio Mart) in the sector, it will be interesting to see how the future will unfold.
Impact on Warehousing
As per studies, transportation comprises roughly 50% of supply chain costs compared with just 5% for logistics real estate. E-commerce players are re-designing supply chain and laying greater emphasis on last mile delivery. They are moving closer to consumption centres. Further, the increasing demand from Tier II and III cities has resulted into increase in warehousing activity in those areas.
As per a survey conducted by CBRE, the most important factors for warehousing quality of warehouse i.e. Grade A and large sized warehouses. During FY 21, ~31% of the total warehousing demand in the major markets was from e-commerce players.
Some of the recent transactions (April 2021 to June 2021) in the E-commerce sector:
|NAME||LOCATION||AREA (SQ FT)|
|FIRST CRY||Kolkata||~2.10 Lakhs
One of the dark horses in this space is the grocery sector (fruits, vegetables, dairy products), which is expected to reach USD 18.2 Billion by 2024. Due to its perishable nature, the products cannot sustain long travel duration and have special storage requirements (temperature controlled, moisture level etc). It will be imperative to store them closer to consumption centre to reduce lead time. However, the increased cost of storage (temperature controlled warehouses) will also have to be taken into consideration.
We believe that the demand from E-commerce players for warehousing will increase going forward due to consumption shifts and digitalization. As the business models of the players shifts towards quicker delivery, demand for in city warehouses will likely go up. Also, with the availability of better infrastructure and high consumer demand, warehousing activity will increase around Tier II and III cities.
 USD 1 Billion of additional e-commerce sale requires an additional 1 Million Sq. Ft of Logistics Space
 India warehousing report, Knight Frank 2021
 CBRE and eMarketer
 A T Kearney, Prologis