3PLs are powering India’s dollar1plus trillion branded retail opportunity: Redseer report

3PLs are powering India’s dollar1plus trillion branded retail opportunity: Redseer report

Bengaluru, March 1, 2025 – Redseer Strategy Consultants has released its latest logistics report titled “Delivering the future: How New-Age Logistics is Transforming Brand Success”, shedding light on the role of logistics in driving growth for brands in India’s retail and e-commerce markets. The report underscores how the logistics sector, particularly third-party logistics (3PL) providers, is becoming indispensable in navigating the increasingly complex distribution networks of brands and delves into the complexities of distribution networks and the technological innovations reshaping logistics operations.

 India’s Consumer Market: A $1+ Trillion Opportunity
India is set to become the world’s third-largest consumer economy, set to cross $3.5 Tn in private consumption in the next 5 years. The country’s consumer base is highly diverse, requiring brands to adapt to varied consumption patterns. By FY34, branded retail—both traditional and new age—will account for over 50% of the total retail market unlocking a $1+ trillion opportunity from brands, which is almost 4x of today.

 E-commerce is also set for remarkable growth, with a minimum $100-120 billion incremental opportunity projected over the next five years, driven by multiple constructs including traditional e-commerce (across models like value commerce, vertical commerce and same day delivery) along with quick commerce and brand.com. Brand.com is expected to grow to >$20 Bn in GMV by FY29 given the continued importance of the channel and brand investments made therein. Further, rise of Tier 2+ city consumers is also going to share the consumption landscape dramatically for brands and marketplaces alike.

 Growing distribution complexities for brands and role of 3PLs
As India’s branded and online retail markets expand, the report highlights the increasing complexity of distribution networks such as omnichannel platforms, D2C storefronts, E-Com/Q-Com warehouses and storefronts, dark stores and the indispensable role of 3PL providers.

 ● Growing Network Complexity: Distribution models have evolved from linear structures to intricate networks comprising omnichannel platforms, D2C storefronts, e-commerce warehouses, and quick-commerce hubs.
● Distribution Challenges for New Age Brands: Up-and-coming new-age brands face unique challenges- including supplying goods to over 100 warehouses across distribution partners, managing fluctuating demand across channels with different timeline and fleet, navigating low-demand volumes in certain channels, leading to partial truckloads, parcel deliveries and low fill rates that pressure margins. Further, handling unplanned and non-transparent returns also put pressure on 3PL supply chains and needs support from the right 3PL partners.
● Growing need for Delivery Timeliness combined with Reach- The demand for faster deliveries is rising across all categories, increasing complexity for 3PLs and in-house logistics providers. This puts pressure on them to deliver more sophisticated, timely solutions that meet consumer expectations for speed across different city tiers and pin codes.

 “3PL providers are an important pillar for Retail and E-commerce growth in India,” said Mrigank Gutgutia, Partner at Redseer Strategy Consultants. “Brands and 3PL providers must work collaboratively to address the rising complexities of multichannel distribution, ensuring consistent and seamless customer experiences across channels and geographies and scalable operations.”

 He further added that, “They are key to enabling brands to scale effectively. Their ability to offer services like express parcel delivery, hyperlocal fulfillment and seamless integration with brand operations ensures timely and reliable delivery. Leading 3PLs are setting benchmarks by providing extensive pin-code coverage, advanced supply chain technology, and customizable solutions for brands across categories.”

 Importance of choosing the right 3PL partners for brands
Redseer’s report indicates that outbound logistics have become increasingly challenging for brands to manage in-house. Third-party logistics providers play a vital role in meeting rapid delivery timelines, managing returns, and ensuring consistent customer experiences across channels. Annual logistics spending by brands is projected to exceed $50 billion by FY29 – almost twice that of FY 24, underscoring the importance of efficient supply chain management.

 The report further delves deeper into the major challenges faced by brands across categories in dealing with 3PLs and the suggested strategic selection approach of 3PL partners for new-age brands.

 Basis Redseer’s research with new age brands, they have the option of choosing multiple 3PL players in the market, each of which brings a unique value proposition to the table. For example, the study indicated that as per brands Delhivery had robust strengths in ‘Delivery Timeliness’, ‘Geographical Coverage’ and ‘Shipment Protection’ metrics and emerged as the most well-rounded player across the key need areas as perceived by brands. While strengths of Bluedart in ‘Delivery Timeliness’ and ‘Shipment Protection’ were also highlighted. Whereas for Ecom Express, ‘Competitive Pricing’ and ‘Geographical Coverage’ emerged as key strength areas.

 This evaluation reaffirms the importance of balancing reach, speed and delivery timeliness with right pricing to effectively cater to brands. It further serves as a timely reminder of the dynamic strengths present across the 3PL landscape and the need for brands to partner with the right 3PL player basis their growth aspirations.