With more than 200 million users‚ India has the third largest number of internet users in the world after China and USA. And yet‚ online retail stands at 8% of organized retail and only 0.5% of overall retail market in India. The e–tailing market is thus poised to grow at a massive 55% p.a. from INR 139 billion in FY13 to INR 504 billion in FY16. A major reason for this rapid growth has been consumer access to products at attractive prices. The e–commerce business model has facilitated cutting out expensive real estate by reaching the consumer directly and thereby being able to offer better prices to consumers.

1. Aurum-DealCurry CXO Dialogues
__________________________________________________________
Webinar on the 17th October 2014: 3pm – 4pm
E-commerce Logistics – Rollicking ride or
smooth pace?

2. Aurum Equity Partners LLP
An investment banking firm, with a depth of diverse-sector experience.

3. Academic Experience:
• MDP from XLRI Jamshedpur, IIM Ahmedabad, ISB Hyderabad
• GMP from National University of Singapore
• AMP from Harvard Business School
PC Sharma
CEO – TCI XPS
Speaker Profiles
3
• Over 30 years of association with TCI
• Heads TCI XPS, a division of Transport Corporation of India ltd. which is
India's leading Multimodal Integrated Express and Supply Chain Solutions
Provider with a Global presence
Conferences and Memberships :
• Board member in Delhi Roundtable of CSCMP (Council of Supply
Chain management professionals) a global apex body
• Represented TCI at FICCI in Task Force of Transport
Development Council, Ministry of Road Transport & Highways
Group

4. Sohrab Malik
Sector specialization:
• Logistics & Supply Chain
• Industrials
Deal Experience:
8+ years experience spread over 20+
deals, business development, project
management, procurement and
strategy development
Academic Experience:
• MBA from Indian School of
Business
• BE (Mechanical) from RV College
of Engineering
Previous Work Experience:
• Ambit Corporate Finance
• Vivant Green Media
• Larsen & Toubro
Conferences & Seminars:
Regular speaker at industry seminars &
conferences.
Speaker Profiles
Select Deals :
Principal
• Sale of Indo-Asian switchgear business to Legrand, France ($120 Million)
• United Spirit’s acquisition of the promoter stake of Pioneer Distilleries ($15
Million)
• Structured Funding in United Spirits Limited from one of world’s leading
financial investors ($100 Million)
• Strategic Partnership of M-Power Energy India, an education and technical
services company with Laureate Education Inc, U.S.
4

5. Disclaimer
• This note is presented solely for the internal use of the recipient to whom it is marked by
Aurum and does not carry any right of publication or disclosure to any other party. This note is
incomplete without reference to, and should be viewed solely in conjunction with, the verbal
briefing provided by Aurum.
• In preparing this note Aurum has relied upon and assumed, without independent verification,
the accuracy and completeness of all information available from published and public sources
and the company. Accordingly, neither Aurum nor any of its affiliates, shareholders, directors,
employees, agents or advisors make any representation as to the accuracy, completeness,
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be construed as an offer to sell any securities in or assets of any of the companies referred to in
this document, or an invitation to offer.
5

6. SECTION1 E-Commerce Market Overview
6

7. Global business-to-consumer(B2C) e-commerce sales were approximately USD 1,251 billion in 2013, as compared to
USD 1,058 billion in 2012
Global B2C sales expected to reach USD 2,356 billion in 2018 growing at a CAGR of 13%
E-commerce sales (USD billion, 2013)
Asia-Pacific
31%
Source: eMarketer, CRISP idea report 2014
431
48
312
50
384
27
40%
28%
12%
19%
28%
31%
72%
33%
72%
31%
45%
31%
80%
70%
60%
50%
40%
30%
20%
10%
0%
500
450
400
350
300
250
200
150
100
50
0
%age
Sales(USD billion)
E-commerce Sales(USD billion, 2013)
Sales Growth(%, 2012-13)
Buyer Penetration(%, 2013)
North America
34%
Latin America
4%
Western
Europe
25%
Central &
Eastern
Europe
4%
Middle East &
Africa
2%
Total sales – USD 1251 billion
Global E-Commerce Market
7

8. Developed Economies Overview
USA UK
• Most retailers are reconfiguring their business
models to compete in virtual marketplace and playing
catch-up with Amazon’s expanded footprint
• Online sales were 12% of total retail sales in 2014
• E-commerce sales estimated to grow at 11% till
2017(p.a)
• Most retailers, pure play or multi-channel, are
setting up more mega e-fulfillment and regional
distribution centers to speed up deliveries
• It is Europe’s largest e-commerce market
• Online grocery shopping catching up in recent years
• Online retail sales = 14% of total retail sales in 2014
• E-commerce sales growth estimated to grow at 10%
till 2017(p.a)
• Investments in parcel delivery centers and e-fulfillment
facilities
• Major food retailers have started offering online
order and home/office delivery services
• Europe’s second largest e-commerce market in
turnover, after UK
• Online retail sales = 10% of total retail sales in 2014
• E-commerce sales growth estimated to grow at 8% till
2017(p.a)
• Second largest B2C e-commerce market in the world
after USA
• Most warehouses in and around Tokyo
• Prominent retailers using ‘click and mortar’ and
‘made to order’ models
• Online retail sales = 4% of total retail sales in 2012
• E-commerce sales growth estimated to grow at 3% till
2017(p.a)
Germany
Japan
Source: JLL report 2013
8

9. Emerging Economies Overview
Brazil India
• E-commerce growing at 35% pa
• Most logistics facilities situated in and around Sao
Paulo
• Online retail sales = 3% of total retail sales in 2012
• E-commerce sales growth estimated to grow at 11%
p.a . till 2017
• Highly fragmented retail market
• E-commerce spending dominated by online travel
• Cash-On-Delivery(COD) preferred mode of payment
• Online retail sales = 2% of total retail sales in 2014
• E-commerce sales growth estimated to be 24% p.a.
till 2017
• Approximately 18% cross-border transactions due to
proximity of USA
• Distribution for e-commerce currently undertaken
with conventional distribution centers alongside
other businesses
• Online retail sales = 1% of total retail sales in 2012
• E-commerce sales growth estimated to grow at 18%
p.a. till 2017
• E-commerce market dominated by C2C transactions,
although B2c e-commerce is on the rise
• Chronic shortage of warehousing facilities in cities
• Large e-commerce players to set up their own
logistics networks
• Online retail sales = 4% of total retail sales in 2012
• E-commerce sales growth estimated to grow at 36%
p.a. till 2017
Mexico
China
Source: JLL report 2013
9

10. E-commerce Industry in India; INR 400 billion (2013)
Online Ticketing
(65%)
Online Retail
(17%)
Online Marketplaces
(18%)
Online Deals and
Portals (<1%)
 Ticketing for air,
rail, bus travel,
hotels/ cruises,
travel packages,
movies, events
 Does not include
captives
 E.g. Makemytrip,
Redbus,
Bookmyshow
 Retail products
sold through the
online route
 Eg. Jabong,
Myntra, Zovi,
Firstcry
 Platforms where
sellers and buyers
transact online
 Does not include
classifieds
 E.g. Flipkart, eBay,
Amazon
 Deals are
purchased online
by consumers and
the redemption
payments may/
may not happen
online
 Includes car, job
and matrimonial
portals
 E.g.Gaadi.com,
Naukri.com
The INR 139 billion Online Retail and Online Marketplaces segments are key drivers for growth of
E-commerce Logistics
Source: Crisil
E-Commerce in India
10

11. • The e-tailing market in India is estimated to be INR 139 billion in FY13.
• Indian e-tailing market is estimated to grow at 55% CAGR and grow to INR 504 billion by FY16.
• The country has over 250 e-tailing portals with number of parcel check-outs in e-commerce portals exceeding
100 million in 2013.
• Online retail stands at 8% of organized retail and only 0.5% of overall retail market in India.
2%
34%
30%
15%
10%
6% 3%
Baby products Electronics
Apparels and accessories Books
Beauty and personal Home and furnishing
Healthcare
24 38 58
91
139
224
334
504
600
500
400
300
200
100
-
FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16
Sales (INR billion)
Commodity distribution Growth in e-tailing in e-tailing (2013)
Source: Crisil, PwC
E-Retail in India
11

12. • China’s e-tailing market has grown at an unprecedented pace over the past few years to reach USD 260 billion size
in CY13. India’s e-retail market at the end of FY14 is estimated to be less than USD 4 bn.
• India’s buyer penetration (percentage of internet users who transact over the internet as well) at 24%, is half of
68
594
789
19
177
398
900
800
700
600
500
400
300
200
100
0
CY03 CY13E CY20E
China India
20%
24% 25%
16%
30%
25%
20%
15%
10%
5%
0%
CY 11-13E CY 13-16E
China India
that of China’s
• Credit card penetration in India is ~2% compared to 30% in China. Cash on Delivery (CoD) in India has helped users
who are either incapable of transacting online or have trust issues with the e-tailers
• In India, the cost of logistics is estimated to be 14% of the total value of goods, while that in China is estimated to
be 10%. This 4% differential is quite significant for e-tailers whose margins are wafer-thin. In developing countries,
cost of logistics varies between 6-8% of the total value of goods
Digital Buyer Growth (CAGR) Internet Users (mn)
Source: ICICI Securities report 2013
India and China Comparison
12

13. Key Growth Drivers for E-commerce Players
Lower operational costs
• Reduced real estate costs; savings in terms of rentals, energy costs, employee costs etc.
• Reduced inventory costs with shift from inventory-led models to market place models
Wider customer reach
• Internet interface making it easier to reach out to non metro locations
• Leading ecommerce players claiming 50% to 60% of revenues from T2/T3 locations
Increasing internet penetration
• India’s internet penetration, rising broadband speeds facilitating growth
• Mobile data users in India is expected to increase four times to reach 1200 million by 2015.
Rise in demand for global products
• Customers in emerging markets including India looking to buy established international brands
• Rise in international shipping contributing to cross border e-commerce growth
Source: The Pioneer, Credit Suisse 13

14. SECTION 2 E-Commerce Logistics
14

15. Logistics Market in India
Market Overview
 Indian logistics industry accounts for only ~2.5% of the
global logistics market (US$ 3.5 trillion)
 The industry is growing at 15% with some sub-sectors
growing at even 30-40% per annum
 The Emerging Market Survey, 2011 conducted by
Transport Intelligence highlights India as the most
attractive geographic area for logistics growth in the
future
 Logistics costs account for 13% of GDP in India
compared to 9% in US and 10% in Europe, implying
sizeable inefficiencies
 Sector is highly fragmented with organized sector
accounting for just 6% of the total market. This share
is expected to increase to 12% by 2015
 Market share of 3PL logistics in India is less than 10%,
compared to 40% in Europe, 57% in the USA and 80%
in Japan
 Companies increasingly focusing on core functions,
and outsourcing logistics needs to take advantage of
the expertise of 3PL service providers
Penetration
3PL contribution
to overall
logistics activity
is still at a
nascent stage as
compared to
developed
nations
Source: Logistics Sector: Present situation and way forward, Deloitte, CII
80%
40%
57%
9%
0% 20% 40% 60% 80% 100%
India
Europe
US
Japan
Source: Logistics in India Part – II, KPMG
Growth Drivers
 Indian logistics and transportation industry is
expected to grow strongly in the near-to-medium
term owing to the following factors:
— Robust GDP growth and high investment
activity
— Existing inefficiencies provide large untapped
growth potential
— Government initiatives and budgetary support
 With large investments in infrastructure, demand for
specialized logistics services has increased
significantly in the past few years
15

16. Transformation of Logistics due to e-commerce
1970s Direct store
replenishment by
suppliers or whole
sellers
1980s Centralization
of deliveries
through retail
distribution centers
1990s
Rise of global
sourcing
2000s E-commerce
model involving
parcel network
Suppliers Shops
Majorly Domestic Suppliers Shops
Retail distribution centers
Shops
Overseas Suppliers Retail import centers Retail distribution centers
Domestic Suppliers
E Fulfillment
Center
Returns
Parcel hub Sortation Center Parcel Delivery center
Local depot (urban logistics)
Customer home
Collection Point
Customer home
Source: JLL report 2013
16

17. Emerging new types of logistic facilities
E-commerce facility Main building attributes Main location attributes
Mega e-fulfillment centers
• Very large (500,000 -1 million sq. ft.+)
• High bay(15 m) to accommodate mezzanine
floors
• Often cross-dock configuration
• High level of employee parking to accommodate
full-time and seasonal staff
• Close to parcel hub
• Close to large labor supply
• Doesn’t need a traditional ‘center of
gravity’ location
Parcel Hub/ Sortation centers
• High length to width ratio
• Low site density
• Cross-dock configuration with extensive loading
for lorries
• 360-degree circulation around the building
• Highly automated internal operation involving
sortation systems
• Center of gravity location to feed local
parcel distribution centers in ‘hub and
spoke’ network
Parcel Delivery centers and urban
depot
• High length to width ratio
• Low site density
• Cross-dock configuration with extensive loading
for vans
• 360-degree circulation around the building
• Typically bespoke, depending on operation
• Edge of major cities or urban areas for
home delivery or delivery to collection
points
Return Processing centers • Typically bespoke, depending on operation
• Located to return items to mega e-fulfillment
centers
DOT.com warehouse for online
food fulfillment
• Specification reflects type of operation. For e.g.
degree of automation
• Bespoke loading division for vans
• Extensive yard area for trailer and van parking
and ample parking for high number of staff
• Edge of major cities or urban areas
where online food order volumes are
the highest
Source: JLL report 2013
17

18. Customer
relationship
management
E-commerce
logistics
Transport -
Distribution
Source: Bluedart Express Annual Report 2014
Information
system
Purchasing &
Supply Chain
Management
Sales and
Marketing
Finance and
Treasury
Point of sale/
Multi-channel
Management
• E-commerce logistics industry size estimated
to be INR 35-40 bn and growing at over 50%
per year
• Spill-over effect on infrastructure and logistics
investments due to E-commerce boom, which
has led to more warehouses, sortation &
delivery centres and employment.
• Warehousing facilities related to e-commerce
currently concentrated in Tier-1 cities.
• India’s multiple tax structure has encouraged
decentralised warehouse networks with
relatively small state-based facilities.
• Implementation of GST(Goods and Services
Tax), expected to encourage the consolidation
of distribution networks
• Likely liberalisation in the form of FDI could be
a vital factor in attracting significant
investments resulting in better infrastructure
and robust supply chains
Ecommerce Logistics Services
E-Commerce Logistics in India
18

19. Key Considerations for E-commerce Logistics

Courier companies' infrastructure traditionally designed to handle documents rather than parcels
Consignment
Type

Low penetration of bank cards has led to prevalence of cash on delivery (CoD). Additional expertise
needed to handle cash and deposit it back to the merchant

Courier companies have to handle entire shipment value as against just the logistics cost
Method of
payment

High proportion of returns create complexity, but at the same time increases the revenue per
shipment and improves margins for the courier company
Product
Returns

The larger companies (such as Bluedart and FedEx) are better placed in terms of reach, pricing and
technical capabilities

Service levels expanded to include services like sourcing, sorting and packaging
Reach and
Service
Levels

Dedicated companies with a focus on last mile delivery can compete effectively on prices with larger
courier companies given lower overhead costs

Consolidator for a particular area is emerging as a viable business model
Last Mile
Delivery
19

Systems have to be ready to handle 24/7 ordering by customers

Las mile delivery timings to be adjusted to suit customer convenience and availability at particular
delivery location (home/ office)
Timing
Challenges

20. Adaptation to E-commerce Logistics
Challenge Trend
Specialized focus and positioning on E-Commerce
required for logistics players
Logistics players launching divisions to exclusively cater
to the ecommerce delivery segment
o DTDC couriers had launched their logistics division
DotZot
o Gati launched their eCommerce hand GatiConnect
o India Post, with the world’s largest postal network is
exploring the option of providing specialised logistics
solutions for e-commerce
Warehousing infrastructure requirements
for ecommerce logistics are different from
traditional logistics warehouses
Investments by logistics players to update infrastructure
o Deutsche Post DHL announced investment of EUR 100
million towards building infrastructure specifically
catering to the e-commerce industry
Balance between economy of scale and
quality control needed for Ecommerce
players
E-commerce players sharing captive logistics resources
o Flipkart opened up its logistics arm eKart Logistics to
other operators
o Snapdeal has opened its logistics platform SafeShip to
rival e-retailers
20

21. E-commerce Logistics Market
Key Players
Courier/ Logistics Companies E-tailer Captive Independent
Market share in E-commerce Logistics
35%
34%
2%
5%
24%
Fedex Bluedart Gati DotZot Others
 For the courier companies, currently e-commerce
logistics constitutes a relatively small proportion of
the overall revenue
o Bluedart: 10-12%
o Gati: 3%
 Leading e-tailers have their own 'last mile delivery'
companies such as eKart for Flipkart and JaVAS for
Jabong.
Established logistics players are actively involved in the e-commerce logistics segment and
control over 70% of the market currently
Source: Credit Suisse 21

22. Cost Structure
Cost Structure per Parcel
6% 4%
37% 53%
Last Mile Delivery Line Haul Sorting Collection
 Logistics related services cost is about 17% of the
total e-tailers' revenue
o Logistics (7-8%)
o Warehousing (5-6%)
o Packaging (2-3%)
 Last mile delivery to remote locations is the largest
cost element in the logistics value chain
 The cost is even higher in cases the products are
ordered through cash-on-delivery mode or if it has
to be returned to the vendor
 Dedicated companies for delivery in smaller towns
and cities can compete effectively on prices with
larger courier companies given lower overhead costs
China Parallel:
o Firms resorted to COD to penetrate and eventually
moved to electronic payment as a primary source of
payment
o As the market matured, greater adoption of
electronic payments was encouraged through
measures such as premium pricing for COD orders
over 'pre-paid' orders.
Source: Credit Suisse
A study in the China e-commerce market found
that the economics of running a self-owned
delivery network is favorable only if the volume is
about 2,500 parcels per day per city (AT Kearney).
In India, the figure may be higher given
underdeveloped infrastructure.
22

23. In-house logistics require heavy upfront
Logistic networks of third-parties reach farthest
corners of the country
Experience and expertise of specialist third-parties
is hard to copy
Easy to modify logistic strategy and switch
partner with third-party logistics
Financial & management resources needed to
run in-house teams; additional operational risk
Source: Zinnov Consulting Report
investment
Managed services are generally costlier; may
change with industry growth
In-House vs. 3PL
Key Parameters
In-house
Logistics
Third-party
Managed
Logistics
Capital Expenditure × 
Last mile Access × 
Expertise in
Operations × 
Agility to Respond to
Dynamic Market × 
Operational Risk &
Requirement of
Management × 
Delivery Cost ? ?
23

24. Select M&A and PE Transactions
Date Target Investor Deal Size (USD mn)
Sep-2014 Ecom Express Peepul Capital 17
Aug-2014 Holisol Logistics Datavision Systems 2
Aug-2014 Delhivery Multiples Alternate Asset 26
Sep-2013 Delhivery
Nexus Venture Partners and Times
Internet
5
Jun-2013
Gharpay (Cash Collection
Service)
Delhivery NA
May-2013 Unicommerce Nexus Venture Partners NA
Jun-2012 Delhivery Indiatimes NA
Jun-2012
Reverse Logistics Private
Limited
Vertex Venture Management, Kleiner
Perkins Caufield & Byers (KPCB) and
Sherpalo Ventures
15
Mar-2010
Reverse Logistics Private
Limited
Reliance Venture Asset Management,
Kleiner Perkins Caufield & Byers (KPCB)
and Sherpalo Ventures
7
Transaction activity in the sector has visibly grown in the last two years
Source: Databoard, Public Sources
Select Transactions
24

25. E-commerce Logistics: Global Outlook
Developed Markets Emerging Markets
• Growth of online retail strong in sectors such as
fashion, electrical and ICT goods, as opposed to
food
• This trend has led to 4 main types of distribution
facilities being setup:
- Mega e-fulfilment centres
- Package hubs/ Sortation hubs
- Parcel delivery centres
- Returns Processing Centres
• Retailers shifting from Multi-Channel retail to Omni-
Channel retail, which allows them to fulfil orders
from local stores rather than warehouses
• Emergence of “Click and Collect” allows customers
to collect their parcels from local stores after
placing the order online, thus eliminating the need
of third-party logistics
• E-commerce logistics still in infancy in developing
countries and different models are emerging
• Models for non-food products are being
implemented to serve major cities where internet
penetration is very high
• Distribution centres being set-up in emerging inland
retail markets, and not just the Tier-1 cities
• Warehouses dedicated to e-commerce businesses
set-up in Tier-1 cities by retailers and third-party
logistics(3PL) suppliers.
• In Tier-2 & Tier-3 cities, distribution for e-commerce
is currently undertaken in conventional distribution
centres, alongside other businesses
Cross-border E-commerce
• Cross border e-commerce growing rapidly as pure-play and multi – chain retailers look to overseas markets to
drive revenue growth
• Challenges in cross border ecommerce:
- Highly challenging logistics of international e-fulfilment
- Significant barriers to entry in many countries
- No on-size-fits-all-model for distribution
Source: JLL report 2013
25

26. Indian Outlook – Aurum View
Logistics landscape evolution will be a crucial factor in realising the potential robust growth of e-retailing industry
FDI allowance in the inventory-led retail could be a vital factor in attracting significant investments from global e-retailing
giants (like Rakuten and Alibaba), which would result in better infrastructure and robust supply chains
Uniformity of taxation policies(like, implementation of GST) will enable e-retailers to move closer to consumption
centres and address the duplicities in the logistics chain by removing the overlaps in form of delivery and sortation
centres.
Evolution of the existing logistics providers(such as FedEx, DHL, UPS, Gati, etc.) and the entry of new players because
of the increasing demands of the e-retailing industry.
Rationalisation of delivery costs - provide balance between using captive logistics network and 3PLs.
Resurrection of the Indian Postal Service can be a game changer. Collaboration the strong last-mile capability with
technological upgradation will ease the dependence on the other modes of transportation
26

27. Contact us at
Corporate Office
301 & 312 A, Suncity Business Tower
Sector 54, Gurgaon – 122002
India.
Fax: +91 124 4424485
Tel: +91 124 4424488
Website : www.aurumequity.com
Email: info@aurumequity.com
Facebook: https://www.facebook.com/aurumequity
LinkedIn: http://www.linkedin.com/pub/aurum-equity-partners-llp/86/91b/12
Contact me at -
sohrabmalik@aurumequity.com
27