DHL bets big on India; To test ecommerce business model

Logistics is the hardest nut to crack in the list of challenges e-commerce entrepreneurs face. Recently, this has also become the area that marketplaces are putting more efforts in. Newer players are entering the market everyday and the current leaders are working out newer ways to tap the market.

DHL has been planning a new product in the e-commerce space for a while, and now, they seem to have the required capital to back it as well. Deutsche Post DHL plans to invest more than €100 million in India over the next two years to create infrastructure for express, aviation, e-commerce and warehousing businesses.

DHL’s CEO Frank Appel said in an interview to Livemint that there is a conversion of consumer market from retail to e-commerce in India. He also opined that e-commerce is next phase of globalisation and retail market will convert to e-commerce space. The company feels it is the perfect timing to enter India and have brought Malcolm Monteiro as chief executive officer of DHL eCommerce Asia Pacific to drive this initiative.

Through its subsidiary Blue Dart Express Ltd, DHL’s business unit DHL eCommerce is investing in infrastructure and development of fulfilment centres, and options for delivery and payment.

“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 is a huge opportunity for us to become the world’s leading provider of e-commerce logistics and we have ready solutions infrastructure in India to pilot our solutions,” Appel said.

DHL will establish 15 e-fullfilment centres to facilitate e-commerce business in metros including New Delhi, Bangalore and Mumbai. They are also expected to start centres in Tier-II and Tier-III cities including Coimbatore and Jaipur. Unlike Blue Dart, which follows an asset light model, DHL specialises in providing integrated logistics solutions including warehousing.

It will be interesting to see if DHL is able to function in a fragmented market like India with SME friendly rate cards.