LOGISTICS

INDUSTRY
By Team
Sukanya Ananth (072)
Bulbul Agarwal (126)
Gauri Shetkar (101)
Sharvani Shastry (100)
Darshana Sah (125)
 Bargaining Power of Buyers

The bargaining power of the customers is medium/high because-

● The number of suppliers in this industry is a lot.

● Minimum differentiation gives the buyers the power to be a
price maker.
● Less switching-cost for the buyers.
● Some degree of threat of backward integration from
buyers.
● Digitalisation of the services enables to have competitive
pricing.
Bargaining Power of Suppliers
Characteristic of Supplier in Logistic Industry:

● Low bargaining power

● Carriers ( Motor, Air and Ocean)
● Physical Assets Provider

The Bargaining Power of Suppliers in Logistics depends upon the following

Factors:

● Number of suppliers
● Limiting the qualitty
● Government Policies
● Reducing Availability of Product/services
● Taxes
Threat of Substitutes

● Product or services of one business can easily be replaced by the products and services
from another if they are undifferentiated.
● Logistics Industry has low threat of substitutes.
● This industry offers variety of services to the customers.
● Logistics services range from warehouse to distribution to final transportation to the
customers.
● The only substitute is transporting which has extra cost incurred.
● The rare case of threat of substitutes would occur if cheap rates of transporters are
found somewhere..
Threat of New Entrants

● Technology has given rise to new business models

● Asset light Start-ups are using digital technology to provide competitive pricing for
freights and matching shippers with available capacity
● Drones, robots and autonomous vehicles represent completely new technologies in the
logistics service industry
● Industry’s own customers may become a threat - Ex: Amazon Robotics
● “Sharing Economy” - Matching available capacity with delivery needs. For example: Uber
has now started UberCARGO
● “Nimber” looks for shipping any anything across countries along with commuters and
passengers.
Rivalry among existing competitors

● Internal Competition is extremely high

● Competition is on price and quality of service
● Internal competition decreases the opportunity to increase prices
● Competition can be attributed to the existence of both international and domestic
players
● Low barriers for new entrants
● Internationally renowned players are FedEx, GAC, ARAMEX and DHL
● Domestic players are GATI, India Express, Blue Dart
● Blue Dart was acquired by DHL in 2004
● Customers switch companies regularly because of more reasonable prices and hence
companies are forced to cut their prices
● Unorganized transporters are the most affected