Ecomm majors in search of large warehouses to expand operations

Large e-commerce firms looking to scale up operations amidst growing online shopping and robust consumer demand in India have floated lease transactions for large warehousing spaces totalling around 4 million square feet, leading industry executives told ET.

Global and domestic organisations like Amazon, Flipkart and JioMart by Reliance are actively scouting for warehousing spaces to expand their operations across top 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.

Accelerated adoption of ecommerce, trends like same-day or next-day delivery commitments fulfilled by third-party logistics companies, and the need to diversify supply chains are pushing demand for warehousing and logistics services.



"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 ecommerce industry has witnessed a huge upsurge post Covid-19 and the market is expected to grow by 84% by 2024 to $111 billion, according to a new report released from financial technology leader FIS.

According to industry estimates, almost one-fourth of the total warehousing space in India has been leased by ecommerce firms such as Flipkart and Amazon in the past two years. This is expected to accelerate on the back of change in consumers' buying behaviour following the outbreak of Covid-19.

The expected growth in demand for warehousing is also likely to attract investments in this space in hopes of higher returns.

"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.

It is estimated that India will see approximately 7 million sq ft of urban logistics spaces demand in its urban centres by 2022, which underlines the importance and pace at which the segment is growing, JLL said in its latest report.