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E-commerce companies look for large warehouses to expand business

Leading industry officials said significant e-commerce firms wanting to scale up operations in India amid booming online shopping and strong customer demand have announced lease transactions for huge warehouse premises totalling over 4 million square feet. 

Amazon, Flipkart, and Reliance JioMart are among the global and domestic companies actively looking for warehousing space to expand their operations across major cities.

“The growth in the e-commerce segment has been significant and once things settle down, the next few years will be good for the industry,” said Aloke Bhuniya, CEO of Ascendas-Firstspace, a global logistics fund.

Demand for warehousing and logistics services is increasing due to the increased adoption of e-commerce, trends such as same-day or next-day delivery obligations fulfilled by third-party logistics providers, and the need to diversify supply chains.

“The Indian warehousing sector has seen significant attraction from both global and domestic investors and occupiers on the back of the GST changes and significant growth in e-commerce,” said Logos chief executive Mehul Shah.

The Indian e-commerce business has seen a major upswing with Covid-19, and the market is anticipated to grow by 84% to $111 billion by 2024, according to a new report produced by financial technology firm FIS.

According to industry estimates, e-commerce companies like Flipkart and Amazon have leased over a quarter of India’s entire warehouse capacity in the last two years. This is predicted to accelerate as a result of a shift in consumer purchasing behaviour following the Covid-19 epidemic.

The predicted growth in warehousing demand is also likely to attract investors looking for bigger profits.

“Government’s support through policy and reforms are further expected to boost the infrastructure spend, and in turn, the overall demand for modern warehousing,” said Chandranath Dey, head – Operations & Business Development, Logistics and Industrial, JLL, India.

India will require about 7 million sq ft of urban logistics space in its urban centres by 2022, demonstrating the importance and rapid growth of the category, JLL said in its latest report.

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