Business Angels look to cash in on ecommerce warehouse demand in India

We have all witnessed the likes of ecommerce marketplaces Amazon, Flipkart, and Snapdeal strategically opening up warehouses or what is referred to these days as fulfilment centres, across the country. This has presented many benefits for all you online sellers, which includes not only being able to sell your products pan-India but also ensures they reach there eventual destination in no time.

The expected high growth in Indian ecommerce is witnessing a premium placed on floor space and keen investors are looking to make a quick buck on the impending situation. Snapdeal currently has 63 warehouses, Amazon has 21 and Flipkart has just 17, but massive investment is planned.

Disadvantages of current building spaces (godowns):

• Low wall height
• Size too small
• Poor ventilation
• Only a shutter to block heat and dust
• Very old structures

Etailers need to overcome the above problems in order to shift goods rapidly from one place to another and avoid products becoming damaged and spoiled which can prove extremely costly.

Etailers modern warehouse needs include:

• Fire sprinkler system
• Temperature regulator
• A flat loading bay
• Good roads leading to warehouse

Mapping the future

The logistics and warehouse industry is currently valued at $110 billion, in the country. It is understood that in the first half of 2015, 20% of new warehouse space was utilised by ecommerce companies. To keep up with the demand, it is reported that modern warehouse space is set to reach a staggering 200 million square feet by 2020, which is fantastic news for land owners.

Funding the growth

Since 2011, the warehouse sector has reportedly raised more than $1.5 billion in private equity funding. Now, Warburg Pincus along with Embassy Industrial Parks plan to build a property portfolio of 20 million sqaure feet over the next seven years and they have started with an initial investment of $250 million. Dutch company, APG is busy looking for a local partner to create warehouse projects, while Singapore based, Assetz Property Group has raised $50 million from Asian funds and plans to raise a further $100 million as it envisages buying 10 million square feet of warehouse space.

“We have got enough people running around with bags of money, and not that many assets,” said Ben Salmon, head of Assetz Property Group.