Hyper-local Logistics & Last-mile Delivery Markets in Tier-2 & 3 Cities of India

Earlier this year, I had arrived in the Masjid Moth locale of the popular South Ex-2 area via the Delhi Metro in the wee hours of the morning. I had an F2F job interview scheduled up. The CV I was carrying had got mutilated, and I was looking for a print-out shop. None were open, and I happened to call a print-shop owner. He said he’d arrive only after an hour, leaving me hankering for the CV print.

Precisely then, a passer-by suggested why don’t I “order” the print-out online on Blinkit (a well-known quick-commerce platform). It took me a while to let that sink in. I installed the app on my phone, logged in, uploaded my CV, and gave the print-order. As I was seated in a market-area, I gave the coordinates of a local popular shop as the temporary delivery address.

Within minutes, I got the CV print in my hands in a properly-sealed envelope, with creative Blinkit branding adorned. It hardly cost me anything. The point is, while Delhi is a metro-city, logistics and delivery are trends fast-catching-up in smaller cities and towns of India too. 

Welcome to the world of hyper-local logistics and last-mile delivery for tier-2 cities and tier-3 towns of India!

Market Overview

Hyper-local logistics involves e-commerce brands quick-catering to customer orders with the help of local shops, retail stores, replenishment centers, dark stores, etc. all within a small, pre-defined area such as a city, a town, or even a locality or a micro-market. Last-mile delivery is a related business concept, forming the last stage of product supply chain, wherein the delivery agent / representative picks up the goods from the final distribution center to deliver them at the customer/ enduser’s doorstep.

Both these business methodologies are playing an increasingly-important role in the Indian e-commerce industry, which itself is evolving more-and-more into quick commerce (ultra-fast, on-demand e-commerce model). This is true not just for metro areas and tier-1 cities, but also tier-2 cities (like Agra, Amritsar, Bhopal, Bhubaneswar, Chandigarh, Guwahati, Jaipur, Jamshedpur, Kanpur, Kochi, Lucknow, Nagpur, Patna, Ranchi, Surat, Thiruvananthapuram, Vadodara, Visakhapatnam, Indore, and Jabalpur) and tier-3 townships (such as Dehradun, Bareilly, Nashik, Udaipur, Belagavi, Kota, Bokaro, Cuttack, Warangal, Dhanbad, Trichy, Puducherry, Thanjavur, Jodhpur, Bikaner, Prayagraj, Varanasi, Madurai, Rajkot, and Vijayawada). The Indian e-commerce market, having created 15.8 million jobs in India, saw a turnover / valuation of around USD 130 billion in 2024, and is slated to grow at an impressive CAGR of over 15% during 2025-2030.

The overall logistics and delivery market in India too saw a voluminous turnover of USD 228 billion in 2024, and is expected to grow at a CAGR of 7.7% during 2025-2030. The industry forms a crucial 7^th share of the Indian GDP pie. The sector employs over 22 million people as-of-date, with a staggering 10 million new jobs set to be created just in the e-commerce-driven logistics market by 2027. These also include blue-collar gig hiring for last-mile delivery and other hyper-local logistics-related tasks.

Growth Drivers and Market Trends

· Quick commerce, rising demand for goods like FMCG & electronics, and rapid digital adoption by consumers have led many businesses to include hyper-local logistics and last-mile delivery within their business models. Brands either get their own hands dirty, or partner with (outsource to) an existing delivery and logistics firm to this effect.

· Customer-push towards instant user gratification / convenience and evolving consumer expectations for instant delivery is a major driver catapulting this market towards rapid growth. This trend is fueling demand both ways, i.e., rising consumer expectations leading to more quick commerce, and vice versa.

· Significant rise in infrastructure development such as improving air & highway-based connectivity in the form of more NHs, SHs, and smaller airports, is also a growth driver for e-commerce-based delivery & logistics.

· Technological progress, in the form of AI, ML, and real-time data analytics, is helping automate and modernize logistics operations across India. Moreover, exponential boom in blue-collar gig economy is being observed across last-mile delivery platforms. 

· The government of India is giving e-commerce-based delivery and logistics across the country a major push through regulatory reforms and initiatives. Major among them are the National Logistics Policy (efficient supply chains with reduced costs), FASTag (automated highway toll-collection system), Government e-Marketplace (GeM), Online Network for Digital Commerce (ONDC), and PM-Gati Shakti (a 2021-scheme to provide multi-modal connectivity infrastructure to different economic zones).

E-commerce revolution beyond Metros

· Zepto, Blinkit, Amazon Now, Swiggy Instamart, Flipkart Minutes, and BigBasket are online instant-delivery services that are growing fast owing to their hyper-local dark stores. They deliver a wide variety of products – groceries, fruits, vegetables, meat. bakery items, personal care products, and even electronics.

· Swiggy Genie, Dunzo, Borzo, and Porter handle different types of errands and last-mile deliveries.

· Pronzo and Lalamove are B2B hyper-local logistics players providing infrastructure & services for businesses.

· Amazon, Alibaba, Flipkart, JioMart, Myntra (fashion), Nykaa (beauty), FirstCry (baby products), Meesho (social selling), and AJIO (fashion) are some more generic e-commerce players in India.

· Delhivery, Blue Dart, Ecom Express, XpressBees, Ekart Logistics, Amazon Shipping, India Post (government), Shadowfax, Shiprocket, Gati, FedEx India, DHL India, and DTDC are the major e-commerce delivery partners.

· Zomato, Swiggy, Domino’s, Pizza Hut, Rebel Foods, and FreshMenu are some major online food companies in India. Some of them are cloud kitchen brands.

Why Tier-2 & 3 Hyper-local Logistics & Last-mile Delivery is a Must-invest Market

· Those venturing into hyper-local logistics & last-mile delivery now would reap in the first-mover advantage in the untapped markets of tier-2 & 3 cities of India. 

· Slew of government incentives and high unmet consumer demand means you would see negligible opportunity cost courtesy your timely decision to venture into quick commerce.

· Low competition, partnering & outsourcing, niche brand positioning and product / service differentiation would mean you experience lower operational costs and higher profitability.

· Your business brand, professional network, and market reputation would grow strong as you happen to empower local businesses & communities in forms like gig hiring, CSR, and local partnerships, and achieve inclusive growth.

· You get to leverage a favorable and growing investment climate in the form of securing venture capital, private equity, institutional investments, and government subsidies.

A Peek into the Quick Commerce Value Chain

1. Online demand generation from the consumer forms the first step of the quick commerce value chain, and you happen to capture it in your orders CRM.

2. You process the order keeping instant delivery in mind. Your cloud kitchen (commercial kitchen exclusive for delivery), dark store (strategically-located warehouse), or local shop / restaurant partner prepares the food / product order and packages it. In parallel, inventory tracking is also taken care of on a continuous basis.

3. Last-mile delivery by gig workers ensures they collect the packed order promptly from you and deliver it at the customer’s doorstep in the matter of a few minutes, taking care of the delivery instructions too, if any.

4. Post-delivery services involve handling returns, exchanges, queries, and feedback, if any, to ensure customer satisfaction.

5. Technology plays a key role across all the stages of quick commerce value chain – your live online platform (front-end of your website or app) for customer’s perusal including pre-paid ordering, CRM software for demand generation, order processing & inventory management, delivery management software, and finally, the binding software that integrates all of the above, so you always know what’s happening on-ground, and can control / intervene / supersede if required. For smaller businesses, social media plays an important role, especially during the initial stages.

Role of The India Watch in your Tiers-2-3 Hyper-local Logistics & Last-mile Delivery Venture Investment

In case you liked reading this article and found it worth your time in terms of your business goals and relevance with respect to your business strategy and decision-making, consider having access to a well-researched, comprehensive tailor-made market/feasibility report detailing Indian hyper-local logistics, last-mile delivery, and tier-2, tier-3 e-commerce market opportunities & trends. That’s precisely what The India Watch can do for you!

You need a professional expert, who knows the pulse of e-commerce-based hyper-local logistics and last-mile delivery markets in smaller Indian cities & towns, to research, analyze, and recommend the first few set of steps for you (such as the right sub-segment, the right time, the right place, the right people), before you lend your hard-earned capital to this space.

At The India Watch, we collaborate with companies, investors, and business owners wanting to explore prospects in India's rapidly-growing e-commerce/ warehouse/ logistics industry. We provide companies with data-driven insights and forward-looking strategies to leverage this high-demand tiers-2-3 market. 

We help you evaluate the industry size, calculate addressable market size, grasp the value chain from sourcing raw materials to acquiring end users, as also conduct detailed feasibility study to set up an e-commerce-based hyper-local logistics and last-mile delivery venture in India. We offer value across a range of segments, whether you are establishing a new facility, increasing capacity, or investigating collaborations in tiers-2-3 quick commerce in India.

We prepare stakeholders to make informed choices through our market research, feasibility studies, consumer behaviour research and financial modelling. We also map client acquisition methods, assess competition, and emphasize the applicable sustainability and regulatory frameworks. 

For further enquiries, reach out to us at info@theindiawatch.com. Let’s explore how we can create value together.