The e-commerce sector in India has witnessed tremendous growth over the last decade. Rising internet penetration, increasing smartphone adoption, and growing consumer preference for convenience and choice have fuelled the rapid expansion of online shopping. The e-commerce market is projected to grow from $70 billion in 2022 to $325 billion by 2030.
While e-commerce platforms like Amazon, Flipkart, Myntra have connected sellers to buyers across the country, last-mile delivery continues to be a major challenge. The last-mile or final delivery from the distribution hub to the customer’s doorstep accounts for 40% of the overall logistics cost. With over 220 million online shoppers expected by 2025, e-commerce players need to find innovative, sustainable, and efficient last-mile solutions to handle the increasing volume of deliveries.
This is where electric vehicles (EVs) and e-mobility solutions can play a transformative role in shaping the last-mile delivery landscape in India. EVs provide greater efficiency, lower operating costs, and environmental sustainability compared to traditional fuel-based vehicles. This blog discusses the applications of e-mobility across the e-commerce value chain and how EV adoption can be accelerated through policy initiatives and public-private partnerships.
Challenges with Existing Last-Mile Delivery Modes
The last-mile delivery for e-commerce in India typically relies on modes like bikes, bicycle carriers, and light commercial vehicles. Most of these are fuelled by petrol or diesel, making last-mile logistics expensive, inefficient, and polluting. Key challenges include:
- High operational costs due to fuel expenses, vehicle maintenance, and manpower costs
- Limited carrying capacity requiring multiple trips and vehicles for large orders
- Lack of real-time monitoring and optimization of delivery routes
- Emissions and noise pollution with fuel-based vehicles in cities
- Safety issues and lack of training for drivers and delivery partners
- Fragmented supply chains and infrastructure constraints
Additionally, the sector is highly unorganized with thousands of small logistics players. Lack of coordination and technology integration across the value chain adds inefficiencies and delays to last mile fulfilment.
Opportunities for E-Mobility in E-Commerce Last-Mile
Here are some ways e-mobility can help overcome many of the last-mile challenges:
- Cost Savings: EVs have lower operating costs as electricity is cheaper than diesel or petrol. EV maintenance costs are also lower given fewer moving parts.
- Increased Efficiency: EVs can handle faster speeds and spend less time refuelling versus traditional vehicles. E-mobility allows optimization of fleet usage and routing through real-time monitoring.
- Environmental Sustainability: EVs reduce air pollution, noise pollution, and carbon emissions especially relevant in congested urban areas. This also helps e-commerce companies improve their ESG metrics.
- Improved Customer Experience: Faster and more reliable deliveries from EVs result in higher customer satisfaction. E-mobility also enables transparent tracking and logistics communications.
- Safety and Training: Lack of license or training is not a barrier to operating EVs. Their easier and safer driving enhances employment opportunities.
- Government Support: Government policies like FAME-II, state EV policies, and electricity subsidies are encouraging EV adoption.
E-Mobility Applications for E-Commerce Last-Mile
E-mobility offers promising applications across all segments of last-mile fulfilment:
- Intercity and Long Haul: Electric trucks and vans can transport shipments between cities, distribution hubs, and warehouses. Introduction
- Middle Mile: Electric light commercial vehicles are suitable for deliveries within cities between hubs and collection centres.
- Last Mile: Smaller EVs like 3-wheelers, electric 2-wheelers are optimal for short distance intra-city deliveries.
Flipkart has already started using EVs to deliver to customers in Delhi, Bengaluru, Hyderabad and few other cities. Amazon India is also running EV pilot projects in over 20 cities. EVs can handle both B2C deliveries to customer doorsteps as well as B2B deliveries between seller warehouses and logistics hubs.
Accelerating EV Adoption for Last-Mile Logistics
While e-mobility offers multiple benefits, EV adoption faces barriers like high upfront cost, lack of charging infrastructure, limited model availability, lack of financing and policy inconsistencies across states. Concerted action is required to accelerate the transition.
- Financial incentives: Subsidies and incentives for EVs under FAME-II policy need to be expanded and streamlined. Attractive financing options can help logistics players overcome higher acquisition costs.
- Charging infrastructure: Setting up widespread charging stations across cities is essential to mitigate range anxiety. Technology solutions for battery swapping and fast charging also need to be explored.
- Pilots and partnerships: E-commerce firms, logistics companies, OEMs, and charging companies need to collaborate and conduct large-scale pilots to identify successful operating models. Insights from these can shape policy.
- Training and awareness: Education on EV tech, driving, and maintenance needs to be provided to delivery partners to ease adoption. Ridership programs can build confidence.
- Supportive policies: State EV policies should be aligned with central policies on EV purchase incentives, road tax, registration, permits for e-commerce sector specifically.
India’s e-commerce growth needs to be supported by efficient, sustainable, and cost-effective last-mile delivery solutions. The environmental and economic benefits of electric vehicles make them a compelling solution for last-mile logistics. With the right incentives and infrastructure, e-mobility can transform last-mile fulfillment for India’s booming e-commerce sector. But this will require concentrated efforts by logistics firms, OEMs, charging companies, and most importantly the government to create the supportive policies and environment to catalyse EV adoption.