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Strategic Analysis of 3PL Markets in the Indian Retail Sector
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Research Overview
This Frost & Sullivan research service titled Strategic Analysis of 3PL Markets in the Indian Retail Sector provides an in-depth analysis of the various segments of retailing and their logistical needs. It also discusses market drivers, restraints, and trends that impact the 3PL market in the retail sector. In this research, Frost & Sullivan's expert analysts examine the following sectors in retailing: apparel and lifestyle, food and grocery, home furniture and fixtures, health and beauty, multi segment, stationery and gifts, watch and jewellery, and consumer durables.
Market Sectors
Expert Frost & Sullivan analysts thoroughly examine the following market sectors in this research:
By Service Providers
- National-level participants
- Regional-level participants
- Local-level participants
By Customer Constellation
- Apparel and lifestyle retailing
- Food and grocery retailing
- Consumer durables retailing
- Health and beauty retailing
- Multi segment retailing
- Stationery and gifts retailing
- Watch and jewellery retailing
- Home furniture and fixtures retailing
Technologies
The following technologies are covered in this research:
- Logistics: The logistics functions include transportation, warehousing, inventory management, freight forwarding, and MIS functions. Individual business segments carry out these functions.
- Third Party Logistics (3PL): The 3PL penetration in the Indian retail sector differs from the various logistics functions such as transportation, warehousing, freight forwarding, and other value-added services. The 3PL usage in the Indian retail sector is considered partial outsourcing. This implies that only a part of the supply chain requirement is outsourced to a 3PL service provider, depending on the retailers' needs such as location of the outlets, number of outlets, expansion plans, and so on.
Market Overview
Entry of Multinationals and Higher Logistic Requirements Boost Demand for Third Party Logistics
The Indian retail market has opened up to foreign direct investment (FDI), attracting multinational companies (MNCs) by the hordes. The country has already acquired 51.0 percent FDI in single brand retailing and this figure is likely to increase further, as MNCs are encouraged to expand their business in the country. Such developments trigger a need for outsourcing the logistics operations, especially since knowledge of the local market conditions is imperative for the MNCs to operate successfully in a country with diverse geography and demographic needs.
The difficulty of serving such distinct customer groups in a new market compels the implementation of higher logistics and integrated service platform. This drives the MNCs to seek the expertise of third party logistic (3PL) service providers to meet their logistical needs at low costs, with minimal investment in the infrastructure. "3PL helps both local and multinational participants to track their inventory and maintain minimal stocks," says the analyst of this research service. "This helps the companies achieve greater cost efficiencies in their supply chain and encourages increased outsourcing of logistics activities to a 3PL service provider."
Provision of Customized Services to Promote 3PL Services among Organized Retailers
Currently, even organized retailers such as those of apparel and lifestyle, consumer durables, food and grocery, footwear and leather, as well as stationery and gifts have not accepted the concept of 3PL. The transportation is carried out partly by organized service providers and partly by truckers and local transporters. The logistics model for each of these organized retailers varies significantly due to the nature of their products and product life cycles. Therefore, future opportunities for 3PL service providers depend a lot on their ability to customize services at competitive prices to suit the unique needs of each of these segments.
With the implementation of value-added tax (VAT), the warehousing activity will be streamlined, providing an added advantage to the retail sector. This requirement is expected to increase outsourcing of warehousing operations in the future. "The rising need to maintain fewer inventories among the retailers is yet another factor that will drive the market toward outsourcing," says the analyst. "Increasing requirement of forwarding and information management functions also help the retailers to achieve greater productivity and efficiency, thereby boosting demand for 3PL services."
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