From building extensive infrastructure to going an extra mile in offering value added services, the courier and logistics services industry is not only providing a platform to business houses to flourish, but has transformed itself into a potentially load
WITH a surge in the number of business houses across India, the demand for delivery and transportation of consignments has grown manifold. And thankfully, this segment has grown beyond the confines of delivering letters and parcels. Today, this segment has assumed a key role in the success of business services industry.
Market potential
The courier and logistics services segment is already on a steady track and has witnessed the influx of several organised players, adding to the growth curve as well as profit potential of the segment. Estimated to be Rs 8,000 crore in market size, the organised courier services segment in India has been tipped to be growing at a steady pace of 20 per cent per annum.
On the other hand, the logistics segment is having a consistent annual growth of around 8-9 per cent. However, the influx and growing tribe of franchise brands has added much impetus to the courier and logistics services industry. These brands have been triggering splendid returns and prominent among them are DTDC, Safexpress, Elbex Couriers Pvt Ltd, DHL, Blue Dart, First Flight Couriers and VRL Logistics.
Food for franchising
The influx of franchise brands in this segment is earmarked by a major ascent in success and revenue. Explaining the growth quotient, Subhasish Chakraborty, Chairman and Managing Director, DTDC, affirms: “5,624 franchisees and still growing strong speaks volume about our success rate. Now, DTDC is a powerful brand in express industry.” The brand has been in the industry since 1990 and had adopted the franchise format ever since its inception. Riding high on success and one the most sought-after bands in this industry is Elbex Couriers Pvt Ltd.
Santhamurthy P, Managing Director, Elbex Couriers Pvt Ltd, says: “The growth prospects of the brand is substantial, as the market is in dire need of organised distribution companies that cater to various delivery aspects in time bound and cost effective manner.” Talking about the success of the brand ever since its inception in 2010, he adds: “The business services segment is a successful module, especially in logistics and courier services industry, as it's majorly about networking and manpower. This module allows exploring the markets even in small towns and villages and also plays a vital role in branding.”
The testimony to the success of these brands lies in the meteoritic rise in the number of franchises. While Elbex Couriers is tasting success with over 300 outlets, for DTDC, the number has been soaring to 5,624. Speaking about DTDC's expansion plan, Chakraborty informs: “By 2014, we will have franchisee strength of around 7,500. Besides, DTDC also entered into logistic business through its supply chain solution division. This division will also offer franchise opportunities to existing small logistic players as well as new entrants.” While Santhamurthy.P says: “We have plans to expand our network pan-India in the next one year through our own and franchise network. The company plans to touch over 30 branches, located in 18 major cities across India. Also, we wish to appoint 500 master franchisees and 5,000 franchises by 2013.”
Even though business services are restricted within metros and tier-I cities due to the volume of business network, however, opportunities galore in tier-II and III towns. Most prominent players are now mulling to expand their radar and reach out to these locations, promising business potential. Quips Chakraborty: “The rural India is growing. And industrial development is pushed to semi-rural areas. We have designed a special rural development plan considering the requirement and diverse culture of India.” This offers lucrative prospects for franchisees in these locations to cash in on the emerging business services market.
Franchise brands in this segment have also confirmed that a lion's share of their revenue comes from their business services and corporate clientele. For DTDC, the corporate sector contributes to the brand's major revenue. As per Chakraborty: “It's our endeavour to provide them services. This has been achieved due to our constant market updates and feedback, which involves research and development at various levels.” Shedding light on the kind of services DTDC offers, he shares: “For business services, we offer regular and tailor-made services that suit our clients. The introduction of premier services has helped our clients deliver their valuable documents on time. This time definite service is extremely popular in corporate world.” Similarly, Elbex Couriers has a platter in tow, says Santhamurthy: “Branding, networking, locations, software, training, consumables and customer service is offered to our business services clientele. As far as corporate clients are concerned, we work on five major business verticals, including banking, finance, insurance, retail and e-commerce.”
As the courier and logistics industry treads its way to a much organised format, experts predict that both upcoming and ongoing trends will rule the roost in the years ahead.
Training & support
While training and support forms the backbone of the industry, franchise brands in this segment offer robust support structure to its franchisees in an endeavor to maintain quality standards. Elbex offers a unique training programme to its franchisees that covers the entire aspects of business from operations to customer service. The brand works on the state-of-art software for tracking, reports and billing that monitors the complete status of the shipments moving in its network. For DTDC, the brand practices ISO norms at all levels. It has its own quality management services (QMS) department headed by top management executive.
The QMS team is an independent body that reports directly to board of directors, follows stringent quality measures, both at franchisee level and at office. Besides QMS, DTDC has its own internal audit team for service level, which ensures highest service standard.
Fighting challenges
Multiple tax policies by all states, various state permits for transportations are some of the hurdles for business services logistic business. The challenges are nothing, but the growing market and demands of customers. The service quality needs to be maintained in all aspects of the business, irrespective of the customer type, volumes and locations. The courier industry majorly benefits through reverse pickups and in business-to-business (B2B) segment, it needs to be understood well by providing better services, especially for inbound shipments.
The way forward
The Indian courier and logistics industry is poised for a significant leap and is on the path of consolidation. Ranked among the fastest growing segments of the Indian economy, it is expected to register a promising growth. Concludes Chakraborty: “A franchisee holds significant importance when it comes to reach and reliability. 79 per cent of DTDC business is generated through its franchisees, which speaks about opportunities for them. Franchising is the only way forward to the growth of this industry.”
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