Deutsche Post DHL picks India for its e-commerce business model

Deutsche Post DHL (DPDHL), the world’s leading mail and logistics company, has picked India to pilot the development of its e-commerce business model for Asia-Pacific. The company is making close to €100 million in investment in next two years in infrastructure and new delivery options for its global e-commerce leadership in Asia Pacific, one of the fastest-growing e-commerce regions in the world. Through its subsidiary Blue Dart Express, DPDHL‘s business unit DHL e-commerce will invest in infrastructure and the development of fulfillment centers, multiple delivery and payment options as part of its aim to become the preferred global provider of e-commerce related services including e-fulfillment and e-facilitation.

“Globally, e-retail is rapidly evolving. Over the next five years, the global e-commerce sector is expected to grow by more than 10 per cent per annum with Asia Pacific leading the way. This region is expected to soon surpass North America and Europe as the biggest online market in the world. As the leading logistics company with an unsurpassed global footprint, there’s a huge opportunity for us to become the world’s leading provider of e-commerce logistics and we have a ready solutions infrastructure in India to pilot our solutions,” said Frank Appel, CEO, DPDHL, while announcing the investment decision recently in Mumbai.

Elaborating on some of the findings from a recent DPDHL report on global e-retail Appel said by 2025, e-commerce share of overall trade volume of emerging markets will be up to 30 percent (40 percent in developed countries). Talking about the rationale for picking India for the pilot programme in Asia Pacific Appel said “the timing is right”. “We expect to see India rapidly moving from mom and pop shops to buying online. India, a country with low telephone density has become the country with the largest smart phone penetration in the world. We will see the same for consumers buying online. India is better prepared compared to China,” he added.

The company had recently appointed Malcolm Monteiro as chief executive officer of DHL eCommerce Asia Pacific to drive this initiative. Germany, the US and UK are among the most matured markets in terms of e-commerce. Appel said the company is aware of problems in infrastructure and last mile delivery issue in India, he is confident that the company has experience to handle these issue and it is building up capabilities to address them.

“With 250 million internet users, Indian e-commerce remains underdeveloped, with online shopping valued at €2.3 billion in 2013. This is expected to grow to €4.1 billion by 2018, a CAGR of 12.3 percent in 5 years. All countries across Asia are in different evolutionary stages when it comes to e-commerce. We need to adapt our service portfolio within the region accordingly,” said Monteiro.

As part of the investment to launch the e-commerce business, the company will open its first fulfillment centre in Delhi later this year and it will be followed by similar ones in Mumbai and Bangalore. These fulfillment centres will be warehouses that will store goods from partners making the last mile delivery easy and quicker. “We are working closely with leading brands, market place sellers and retailers to help them establish a sustainable e-commerce footprint. That’s why we are investing in the right infrastructure -including IT - to build the right model for consumers and sellers,” said Anil Khanna, managing director, Blue Dart Express.