E-tailing rivals Flipkart and Amazon are aggressively looking for land in the Sriperambudur and Red Hills area on the outskirts of the city to house their warehouses.
Real estate analysts estimate land prices at these two localities to be anywhere between Rs 1,500 to Rs 2,000 per square feet. This would translate into an investment of anywhere between Rs 20 crore to Rs 100 crore.
“They would finalise the place in two months. Both the online firms want a land bank of 1 lakh square feet which can be scaled up to 5 lakh square feet. The warehouses will be developed phase-wise,” said a source who is aware of the development. “These are not ordinary warehouses. What they are looking at is humidity controlled warehouses with a friendly loading base,” added the source.
When contacted Amazon India Spokesperson said, “As a policy, we do not comment on what we may or may not do in future.” Flipkart refused to comment.
Tier-2 target“Two years back e-commerce firms saw huge sales only from metros. But now there is a surge even from tier-2 and tier-3 cities like Madurai, Coimbatore and Trichy,” sources said.
According to Forrester’s Asia Pacific online retail forecast for 2013- 2018, the number of online buyers in India will reach 39 million by the end of 2014 and 128 million by the end of 2018.
The research firm says the majority of online buyers were from metropolitan or tier one cities few years back. Now, companies are seeing increasing sales from tier two and tier three cities, as well. Also, only 31 per cent of the total Indian population lives in urban India whereas 69 per cent lives in rural India.
In the coming months, both the firms will also be looking at warehouses across NCR, Delhi and Mumbai. They want to ensure that they connect every nook and corner in next two years.
“For e-commerce firm to be successful in India, a centralised warehouse system will not work because there is a huge transportation cost. So Amazon and Flipkart would look at warehouses at various locations,” says Arvind Singhal, Chairman of retail advisory firm Technopak, said.
According to a bi-annual CBRE report, e-commerce firms have taken up 0.6 square feet of warehousing and logistics space in India during the first half of 2014.
