India’s logistics space is booming and investor interest in tech-based logistics start-ups has risen exponentially.
FREMONT, CA: The logistics industry is the by-product of the rise of the e-commerce industry. Plenty of start-ups sprouted to cater to online retailers and provide efficient business-to-consumer (B2C) supply chain solutions. With the growth of the logistics industry, investor interest has witnessed a significant increase in the business to business (B2B) as opposed to the B2C market. Notable investments in this space are the testament to the prominence of the B2B logistics tech start-ups.
In 2019, the logistics sector garnered 6.25 billion USD investments across just eight deals that are six times more than last year across 20 deals. “The logistics space is huge and can accommodate 10-20 billion dollar companies that are strong enough to generate massive revenues. Such promising results makes logistics interesting to investors like us,” says Alok Goyal, Managing Partner, Stellaris Venture Partners.
In the year 2019, India has produced its first unicorn—a start-up with more than one billion USD valuation—in the logistics space, Delhivery. The other companies such as Blackbuck and Rivigo in logistics tech space were named “soonicorn” (soon to be a unicorn). On the other hand, AI-backed supply chain optimisation start-up Locus raised significant funds from marquee investors like Tiger Global and Falcon Edge. Locus amazed investors because market leaders like BlueDart, where their large-scale clients and the company have delivered double-digit profits. Despite being four-year young in the market, the company is generating billion-dollar revenues and investors believe that innovative B2B logistics start-ups employing cutting edge technology such as automation, data analytics, robotics, and the Internet of Things (IoT) is the future and has the potential to disrupt the logistics market.
Presently, B2B logistics start-ups that provide the tech to address the whole spectrum of logistics—last-mile delivery, warehousing operations, to demand forecasting, freight transportation, among others—have grabbed the attention of investors because B2C logistics has mostly played itself out.
Logistics holds promise due to the experiments, consolidations and the different models tried by start-up founders. Both e-commerce and retail are a tiny part of logistics. In the same vein, Arpit Agarwal, Principal, Blume Ventures, says, “Everything we buy comes through a chain, and the logistics is the key part of a large distribution network.” India’s tech-based logistics start-ups are looking to disrupt each stage of the supply chain by using innovative technology.
Regardless of the size of the company, serious challenges such as competition, unpredictable demand patterns, rising fuel costs, streamlining deliveries, and dynamic costs. However, tech-based logistics start-ups tackle these challenges by offering related solutions. Due to the challenges, logistics is a tough business to enter. The companies have to match the supply and demand and then find the perfect technology that matches. Logistics is a complicated business, and the start-ups need to understand its different nuances and once understood, there are endless possibilities.