Just pull out any report and the top three logistics businesses in India would be DHL, UPS and FedEx. Strangely, all these multi-billion dollar companies are from the USA. India’s largest logistics companies by revenues are Concor and TCI. The former is perhaps going to breach the $1 billion mark when we close the books of the financial year 2019.
According to IBEF the logistics industry is set to be worth $215 billion by 2020-21, recording a 10 per cent compounded annual growth rate (CAGR) over its approximate size of $160 billion in 2016-17. This number should tell you something about the logistics industry. 95 percent of the industry is unorganised and fragmented with single owner truck drivers and warehouse operators. Even with companies like Udaan, Rivigo and Shadowfax, which have higher valuations, are still a long way away from making a dent in the Indian logistics universe. So, for those reading this the business of logistics is a gold mine. But, it is not for the faint hearted.
However, we at Lobb believe that the logistics industry is on the cusp of getting the smaller players to use technology and change their business forever. By doing so we will see the large player cross $1 billion faster than before because their ecosystem is going to go through a digital revolution.
The rise of Jio
Over the last year or so Jio has added more subscribers, it has grown faster than any other telecom operator. It currently has 280 million subscribers. With its data plans being the lowest in the country, the competition has also dropped pricing just to keep customers from shifting to Jio. The end beneficiary is the customer who can consume as much content as he or she needs. In a report by The Boston Consulting Group (BCG), Entertainment Goes Online, says that since the launch of Jio, quarterly data consumption has grown 10-fold, clocking unprecedented growth and “providing an avenue for the latent demand for digital consumption of Indian consumer” because it is now affordable. It is only a matter of time before the B2B industry catches on to the B2C trend.
The rise of the affordable smartphone
India is one of the largest buyers of affordable smartphones.
In 2018 India’s smart phone users crossed 330 million, according to Statista. In 2017, the number of smartphone users in India is estimated to reach 299.24 million, with the number of smartphone users worldwide forecast to exceed 2.3 billion users by that time. The number of smartphone users worldwide is projected to amount to nearly 2.7 billion by 2019 and will reach 373 million users in India. Think about this combination, of affordability and drop in prices of both smart phones and data plans, it would straight away lead to several services like payments and B2B apps usage to rise in the logistics industry.
The rise of cashless payments and consumption
Thanks to the Unified Payment Interface there has been a faster adoption of digital payment services. Truckers are already familiar with UPI, PhonePe and PayTM. The UPI payment interface and these payment platforms have impacted more than 250 million lives and will reach close to half a billion people in three years. With these cashless payments, businesses can now transact and scale faster.
With the payments piece complete the logistics industry in India is only going to rise as consumption in India is on the rise. According to the World Economic Forum India will be the third largest consumer nation after USA and China. When it becomes the third largest economy, its PPP will cross $5000. Currently it stands at $2000. Now when you look at China, it crossed the $2000 PPP in 2004 and it has become the fastest growing economy for the last fifteen years. India will see the same unprecedented growth thanks to its median age of 27 and the growth in jobs. These macro-economic factors will increase consumption and when consumption rises, the logistics industry has to be ready. This is where we come in.
Impact of Lobb to create a $1billion industry
We are in a very special place today to capture this growth with the rise of our transport partners. We help our transporters, agents and truckers discover each other faster and thereby manage demand with just in time supply. Our application has already changed the lives of more than 10,000 truckers and partners. We are well poised to reach 100,000 customers in three years, to become one of the preferred technology partners in organising the unorganised industry. We want you to become a billion-dollar in revenues organisation, let us help you roadmap that journey.