What is Logistics Management: A Comprehensive Guide
As we all can see, India is going through a rapid transformation. With a steady and good growth rate, we are becoming a giant economy, and this is going to benefit every industry. And the logistics industry is one of the few that is seeing huge growth. So we can say that the logistics business is one of the most promising businesses in 2024 and beyond.
The demand for basic needs and the creation of new products and services will never end. So there will be a never-ending demand for transportation services too. Hence if you are planning to provide logistics services in local, national, or international markets, this is the best time to start. And you are on the right page to learn how to start a logistics business in India.
A logistics business is a combination of three core activities as below;
The three core activities listed above involve many operations. Some of them are;
With this clarity about what is a logistics business, you are ready to learn more about how to start a logistics company.
Since logistics is a vast field, you have to find the most suitable place where you can fit well. Hence you have to research to prepare a solid base for your logistics startup in India. Starting with the first thing, determine the area or the market you want to serve. Next, research and find the stats about the demand and supply for logistics services in your niche market. Also, analyze the supply and top companies offering logistics services in that area.
Once selecting a niche for logistics services, check if the demand is more than supply. This is crucial to creating a base on which your logistics business will stand and grow.
Now let’s explore business models and ideas to help you pick the best one for logistics for your startup.
There are several types of logistics companies, so the next important thing is to select a business model. At this stage, decide whether you want to set up a firm or be a franchisee of an established brand. You can also take over an existing firm. Further, choose if you want to be a sole proprietor or need a partner in your business.
Look at your resources and availability of funds while selecting a model. Brainstorm various logistics business ideas and weigh their pros and cons. Considering the end user, you can choose to enter one or both of the B2B & B2C logistics markets. Further, you can think out of the box and use technology to create a solution that solves a particular problem affecting a large customer base.
Think about a mobile app that allows truck operators, agents, and truckers to list their trucks with availability. The users can find the best provider for their transportation needs and budget. It can be B2B or B2C, and you can serve to bridge the gap between the demand and supply with your platform without owning trucks.
Once you are clear on the business model and the services to offer, you have to start the legal documentation. The first thing is to register your firm and get the necessary certificates and licenses as per the law.
Get your startup registered with Startup India (a government initiative) and get a DPIIT recognition number. With DPIIT, you can avail many benefits to start and run your business in the initial phase. I.e., you can get funding, tax exemption, rebates on fees for licensing and other certificates, etc.
Apart from this, below are the licenses you will need to start your business operations depending on your scope and the market you serve.
Freight forwarders must register with the authorities listed below;
Other registrations you will need for your business are;
According to your business model, services, and scale, you will need an initial investment. Here are some options to get funding to start your logistics business operations.
If your services include storage and transportation, you will need a warehouse and transport vehicles. You can own or rent storage facilities and trucks. For the use of technology, you can have software built in-house for your custom needs. Or else you can use one of the SaaS solutions with functions of logistics management, planning, and accounting for operational efficiency.
Next, you will need a trained team to perform daily activities and serve your niche market. Hire qualified, trained, and experienced staff for crucial functions, e.g. warehouse and inventory management, accounting, and logistics operations. If you have a transportation fleet, hire skilled truck drivers for smooth and timely delivery.
Take the help of a recruitment and human resource agency to build an efficient team for smooth logistics business operations. You can also conduct training to prepare your staff for your unique needs based on your business model.
Marketing and customer acquisition are the two most important aspects of the success of any business. The first part includes creating a robust yet flexible marketing strategy for a strong entry into the market. Create effective marketing content and material to promote your services, build a brand reputation, and attract customers.
The second part is your customer acquisition process. This is the most important activity after marketing as it converts inquiries and leads into customers. Further, these are the most important KPIs in logistics or any other business. Hence your sales process must be powerful and handled by a skilled and trained team.
As a new player in the logistics business, you may have to face several challenges, i.e., transportation mode issues and related logistics costs, shortage of skilled labor and drivers, warehouse access or maintenance issues, increase in fuel costs, complex operations, and technology integration, etc.
Any business may face such issues, but there are solutions as well. You can overcome them with advanced planning, solid but flexible strategy, customer-focused services, and the power of tech & automation in the logistics industry.
Rapid development in India is creating a plethora of opportunities, and logistics business is one of them. Due to the high demand for logistics services, many entrepreneurs and businesses are entering this sector. Keeping this in mind, we discussed the steps on how to start a logistics business in India. We covered the most important aspects, like understanding logistics, conducting research, niche and market selection, business model and idea, registrations, certifications, technology integration, hiring, and marketing. Further, we also discussed potential challenges and solutions to overcome them.
In a nutshell, this article can be a quick and complete guide for those aspiring to start a logistics business in India. Ready to start?
All the best!
