The logistics economy has exploded in size, creating a massive opportunity for logistics enthusiasts. Is that starting a logistics business in India is a lucrative? – Its yes – quite demanding, effective & lucrative. With the increasing demand of E-commerce business, the need for having a potential logistics support is quite imperative. A cost effective logistics partner can increase operational efficiencies by increasing speed movements, reducing cost & valuing time. If you have a key mindset to enter into logistics business, you must build & develop a base in order to successfully penetrate & sustain the market. And with the various government initiatives, building a logistics business has been a hotspot for many young entrepreneurs.
1. Choose Your Business Model:
Making the base correct is always a significant step in starting something – and that’s the prime objective to make the business model correct. If you wanted to own a logistics business, it’s important to decide either you wanted to own a complete new business or enter into a franchise agreement with a reputed, stabilised Logistics Company. Both the model will have their own set of advantages & disadvantages.
- Own setup will allow you to experiment with new ideas, set a new market and start from the scratch, however you will play with your own terms, pace & margin. Have a complete control on “who are your customers”, “revenue streams” & experiment with your core expertise.
- Franchise set up, will come with a lower commitment, a set market base, brand visibility which makes lowers the business risk & increase the profitability lead period.
You can start a delivery service, pickup service, focus on the distribution operations. You can provide warehousing, ecommerce fulfilment or completely became an end to end logistics provider for a B2C or a D2C company. However before starting the business, few key questions has to be though through to make the journey smooth later.
- Who are going to be the key customers?
- Major Key partner for various business processes?
- What are the key core competencies, why the customer should choose you?
- What are various revenue streams?
- What are various cost elements/structure involved?
- And also how are you going to reach your customers & maintain a customer relationships?
2. Register Your Logistics Business:
Along with the base idea, preparing the base legally will help to penetrate into the market. Obtaining a proper registration & compliance checklist is quite essential. Like any other business, logistics business also need to have all the required regulatory & compliance activities done. If you are planning for an “Air Freight forward business”, then “The International Air Transport Association (IATA”) & the “Air Cargo Agent Associations of India” wanted to have you registered under them. Registrations with the Income tax department, DGFT, registrar of companies and other related departments are required to start a logistics business in India.
3. Prepare Your Capital or Seek Investment :
You will not be surprised to know that, Logistics is a capital intensive business, but it purely depend on the business model that you have aligned. Logistics industry completely relies on capital, and it’s essential to do some financial homework before you enter into the business & Investing. Based on the business model, you have make the investment strategy as well. If it’s only to start a small delivery service, bootstrap is quite advisable, and however for the business into inventory, fulfilments etc. require capital to start with. Calculate how much money you will need to start for based on the model. The amount of money required to invest into a business is dependent on the services that you wanted to cater.
4. Predict & Know Your Potential Risks:
When starting your logistic business, assessing your potential risk is your next step. India is large in its geographic dynamics & certainly in every few kms the essence of business becomes different in so many way. Customer behaviours, technology requirements, utilization of capital etc. will have a huge possibility to vary. And in the same time the dynamic nature of logistics will change drastically & would require a quick assessment of potential risks as well. Due to lack of tech penetration at interior part of the nation, the business is quite cash intensive & require additional process set up for Cash management too, which comes with an invisible additional risk – Thus a rick of a claim is also relatively high. Company insurance is a solution which is required to cover the liabilities. Lost, Pilferages, damage, mismanagement of Cash, manpower injury, environmental damages etc. are various potentials risk that need to be thought through and its critical to recognise such aspects in the partner contracts & other associations of the business value chain.
5. Customer Acquisition & Retention:
When it comes to customer, it start with a problem statement. Which part of the customer’s problem your logistics business is trying to solve – The major focus area. Are your trying to reduce their logistics cost, do you want to give an advantage of Speed with an optimised network, how well you can manage the customer experience. India has huge requirement of logistics partners scattered across the industries, including automobiles, renewal energy, ecommerce, and manufacturing. It is required to understand the customer’s pain point & start increasing the base of customer slowly by solving the major problems.
No business is easy to start with, neither to sustain the same. So as the logistics business as well. But a proper plan with correct intention to solve a customer’s problem can turn around the situation.
