In-city warehousing demand may rise as e-commerce firms target same-day delivery
The demand for small warehouses within city limits is expected to rise over the next one year as e-commerce firms are targeting to ensure same-day deliveries of food and groceries items to customers, according to a report.
The demand is likely to be for warehousing of 5000-10,000 sq ft size, property consultant Colliers International said. "E-commerce companies are focussing on same-day delivery with the pandemic-influenced lockdowns placing greater dependency on e- commerce for food and grocery items," the report said. The consultant said that e-commerce companies are now trying to stock a larger proportion of inventory closer to their customers' locations for efficiency and to improve the quality of products upon delivery. "Over the next 12 months, we believe in-city warehouses will gain traction, to be used as small distribution hubs. We expect occupiers to scout for in-city warehousing space in the range of 5,000-10,000 sq feet in major demand hubs such as Mumbai, Bengaluru and Chennai and the NCR," the report said.
Even the older and lesser utilised ground level office spaces and service centres are being considered to set up small warehouses. Anarock Chairman Anuj Puri said e-commerce was flourishing in India even before COVID-19, and lockdowns and closure of malls have accelerated this growth. Recognising the potential of online sales, he said many businesses are now taking omni-channel business models seriously and scrambling for additional warehouse capacity across cities. "In terms of new trends, multi-level warehouses within city limits could see higher demand," Puri said. Currently, warehouses in top Indian cities are largely restricted to the peripheries, quite far away from a larger customer base.
In-city warehouses will help companies to minimise transportation costs and execute faster delivery timelines €“ the key to success for many businesses in today's competitive era, Puri said. E-commerce companies and third-party logistics are major drivers of warehousing demand in the country. As per Anarock, USD 2 billion of PE investments came in the warehousing, industrial and logistic sector (2017-Q1 2020). Nearly USD 7 billion worth platforms have been created for warehousing since 2015.
Sachin Chhabra, founder of Mumbai-based startup Peel-Works, which is into B2B grocery e-commerce business, said: "With B2B fulfillment moving towards just-in-time service levels, proximity to warehouses for companies like ours helps corner stores free up their space, and working capital." "This additional space will get added as a storefront enabling the store to increase its assortment and modernise itself. The reduction in working capital will allow the retailer to compete with e-commerce and organised retail on both assortment and prices," Chhabra added.