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CRISIL SME Tracker: Document skew, regionality to weigh down courier SMEs

The e-commerce industry is the fastest-growing segment of the courier industry, accounting for 25-30 per cent of its revenues

Business Standard 

E-tailers go all out to keep sellers happy

CRISIL expects small and medium enterprises (SMEs) in the air freight and courier services sector to grow at five to seven per cent in fiscal year 2020, slower than overall sector growth expected at 9-11 per cent, because of their significant dependence on the document segment and region-specific operations.

Consequently, their market share, which is about 25 per cent, will decline.

Growth in the document segment has been low and declining because of rapid digitalisation in traditionally high courier-dependent segments such as banking and financial services, and telecom. The trend is expected to continue over the near to medium term.

CRISIL SME Tracker: Document skew, regionality to weigh down courier SMEs

During the current fiscal there will be a double whammy, since the non-document segment is also expected to slow down because of tighter regulations on e-commerce announced by the Department of Industrial Policy and Promotion in December 2018.

The new rules say e-commerce platforms following the market-based model (such as Flipkart and Amazon) cannot have stakes in vendors on their platform. The platform operator is also not allowed to have significant control on the inventory of a vendor. That restricts the modus operandi and will impact growth in consignments of e-commerce majors.

The e-commerce industry is the fastest-growing segment of the courier industry, accounting for 25-30 per cent of its revenues.

First Published: Mon, July 22 2019. 20:01 IST
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