Why India Is Betting On Big Storage Sheds For Warehousing
E-commerce is going to be massive in India, observing the huge digital shift happening throughout the country. With various categories in e-commerce, India expects the sector to revive as people make a behavioural shift from offline to online shopping. In the post-covid world or say with the new normal, warehouse with big storage sheds will play a crucial role. If there isn’t enough storage, one cannot meet the demand and neither will the delivery speed-up.
Further to this, additional warehouses will allow firms to create a buffer of goods. Many warehousing complexes are also expected in the post-covid world. E-commerce companies intend to expand their network into tier-II and tier-III cities and want to be close to their delivery location. Robust supply of warehousing will cater to these companies.
As per the recent JLL report, the warehousing stock of India is expected to cross 375 mn sq ft by 2023. In India e-commerce firms generated about 80 percent of the demand for warehousing. As per the new normal and government guidelines for social-distancing, people will move away from offline shopping and invest in the digital medium. Warehousing will be nodal points in the complicated e-commerce supply chains. Quick delivery along with big storage is the essence of success, the primary reason for brands to invest in opening multiple warehouses around the country.
In the current situation, providing convenience to the customers is the mantra of success for e-commerce players. Customers will be expecting their orders to be delivered at the earliest possible. Brands prefer to build multiple warehouses near their consumers to fulfil the increasing consumer demands. Innovative technologies, coupled with viable government reforms and other global collaborations will further push the envelope of development for and given the dynamics at play, demand and supply are both poised to burgeon in the coming years. Without an efficient network of warehouses deliveries would be delay or might take long than we have come to expect. Currently, a large junk of non-essentials is stocked up in warehouses as only essentials like medicines, sanitizers, masks, etc are being dispatched. Post the lockdown, the non-essential market may not be as buoyant and a category shift is likely hinted. People might now purchase more and more basic items online along with expensive ones. The quantum required to service the basic requirements are higher which needs big storage sheds for warehousing to drive the demand.
In India, smaller towns are adopting to work from home (WFH) module which might get extended. People have also realized that WFH helps with social-distancing and staying safe. The local consumption of daily requirements will increase, if employees are based out of tier two cities. Therefore, warehousing with big sheds in tier 2-3 cities are more likely to be expected. The main factors driving demand for warehousing is e-commerce, especially retailers in tier-2 and tier-3 markets.
Warehousing demand in India has overtaken supply, with e-commerce and global consumer goods companies driving much of the growth. The lockdown phase has also witnessed an increase in startups ventured into various B2B2C space while having tie-ups with various ecommerce firms. This needs quality warehousing spaces for stocking up the goods while ensuring speedy delivery to meet the demand. A survey conducted in February, 2020 reveals that many Indian startups had prioritized growth over profitability. The on-demand warehousing has been the latest upgrade in the warehousing sector. The warehousing services needs to be purchased on a pay-per-use basis by the owner. It is as similar as services offered by AirBnB and Uber. The advantage of on-demand warehousing is cost-effective and convenience. The marketers are enabled to expand their network and have nothing worry regarding buying the warehouse space or building one. They can acquire or own the space from other firms who are ready to sell or give away their warehouse on-demand. This helps in establishing businesses in new locations with its hassle-free approach.
As conclusion, growing ecommerce demand, changing consumer consumption patterns and rapid adoption of omnichannel distribution models by companies in the backdrop of the Covid-19 outbreak are likely to increase demand for warehousing spaces across the country.
With prospect of higher returns and expected growth in demand for warehousing is also likely to attract investments in this segment. Ecommerce players could selectively undergo to increase warehousing spaces at key locations. Going ahead, Indian warehouses are likely to invest in technologies as well to aid business continuity.