India’s growing appetite for on-demand warehousing

The COVID-19 pandemic has spurred the emergence of a vibrant ‘on-demand’ economy globally and in India. In layman’s terms, it can be described as an economic model leveraging digital technologies to offer access to different services. With legacies of conventional warehousing fulfilments and rigid 3PL partnerships rendered obsolete, companies are increasingly evaluating the efficiencies of on-demand warehousing as a cost-effective and flexible business solution.  On the demand side it implies the speed at which a service can be accessed by a customer and on the supply side it implies the efficiency at which the service is provided by the service provider. Speed, scale, access and service efficiency form key parameters of a seamless and efficient ‘on-demand’ warehousing model.

On-demand warehousing is an online marketplace model. It taps the power of app-based tools to help customers with warehousing space requirements connect with logistics players offering excess warehousing capacity on a pay-per-use basis. By monetising unutilised storage spaces, warehousing players are saved the hassle of bearing considerable expense on surplus spaces in on-demand warehousing.

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A report by leading property consultant Knight Frank estimated that warehousing space in India is expected to double over the next five years. This will be facilitated by a boom in the e-commerce segment in the country. The report has stated that from 31.7 million sq. feet in 2021, annual warehousing transactions in the country would increase to 76.2 million sq. feet in early 2026. Predictions from the report further point to the fact that 165 per cent additional space in warehouses will be occupied by the e-commerce sector over the next five years.

The robust growth of the e-commerce market in India has changed the operational dynamics of conventional logistics. As customers demand greater transparency in their buying experience, on-demand warehousing has proven to be a flexible business model for retailers and brands offering operational scalability and supply chain agility.

Businesses can gain substantial cost and scale benefits by focusing on their core business activities and outsourcing non-core business activities like warehousing to expert solution providers. They are not required to incur huge expenditures on setting up and maintaining a large warehousing and fulfilment network for inventory storage and distribution. Leveraging the on-demand warehousing model enables companies to fulfil orders when demand is at peak and scale back when not needed.

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With a large number of consumers registering their presence on e-commerce platforms to buy goods and services, there are rising expectations of one-day or same day shipping. On-demand warehousing facilitates decentralised warehousing and shipping networks near customer locations enabling speedy last-mile deliveries within stipulated timelines. On-demand warehousing solutions providers offer flexible billing, streamlined order fulfilment processes and efficient distribution channels allowing merchants and brands to pursue a robust omni-channel strategy for business growth and expansion.

Pro-industry government interventions like 100 per cent FDI in warehousing have placed the industry on a high-growth trajectory. This has led to increased fund inflows into the sector from domestic and global institutional investors. In an environment where online is becoming the new offline, on-demand warehousing is emerging as a game-changer for the Indian warehousing industry. Rising internet penetration, tech adaptability, conventional businesses developing online competencies and omni-channel retailing have led to the creation of a vibrant e-commerce ecosystem in India.  The ‘uberisation’ of warehousing has the power to position India as a global e-commerce destination.

Views are personal. The author is Chief Operating Officer – Supply Chain, Avvashya CCI Logistics.