Despite rapid growth in India’s organised retail segment, a significant issue related to internal logistics is undermining profit margins. A study by ClickPost, a logistics intelligence platform, reveals that inefficiencies are creating an “invisible tax” of over Rs 2,000 crore annually. The analysis is based on data from 48 omnichannel brands utilizing the platform, covering more than 15,000 stores and processing 7.2 million shipments from January 2025 to January 2026.

Challenges in Internal Inventory Movement

While retailers have become adept at delivering products to consumers, the process of transferring inventory within their networks remains cumbersome. This includes the relocation of unsold products between stores and warehouses. Factors such as manual processes, delays, and inadequate coordination cause significant lags in inventory movement, which in turn ties up working capital.

This issue is especially pronounced during peak sales periods. For instance, a fashion brand operating 150 stores observed that the time required to return unsold goods increased from 0.2 days to 13 days at the end of the season, impacting cash flow.

Costly Delays During Peak Sales Periods

During peak sales, the observed pressure intensifies, resulting in substantial operational costs. The report estimates that approximately Rs 200 crore was immobilized during a single sale period due to delays in internal pickups, despite the readiness of warehouses and logistics partners. Extrapolating this over the year, it translates to a sector-wide impact exceeding Rs 2,000 crore.

A significant portion of this problem arises from the reliance on manual systems; around 85% of brands manage internal logistics using emails and spreadsheets, which can be up to five times slower than their automated counterparts. For large retail chains, this can lead to delays of up to two weeks and result in losses of Rs 40 to 50 lakh per sales cycle.

Concerns Over Retail Cycle and Complexity

The situation is becoming increasingly problematic due to rapid changes in the retail environment. Fashion cycles have contracted from about 90 days to just 15–20 days, allowing minimal room for delays. Consequently, by the time inventory arrives at warehouses, it may already be outdated. Concurrently, sale periods now often see a volume increase of three to four times, intensifying pressure on logistics systems. Retail networks have also grown more intricate, commonly involving eight or more points like stores, warehouses, and hubs, complicating coordination when lacking automation.

The Financial Impact of Inefficiencies

These operational gaps manifest in daily tasks, with invoice discrepancies occurring in 10–15% of cases and resulting in approximately 1,500 disputes monthly. Teams dedicate nearly 65 hours each day to resolving these issues. More critically, delays in inventory movement are leading to a loss of 8–12% in potential sales during peak periods. The report indicates that brands relying on manual systems are incurring losses between Rs 5 crore and Rs 15 crore annually due to these inefficiencies. Overall, the retail sector is thus facing an annual financial impact amounting to Rs 2,000 crore.

The Path to Improved Retail Efficiency

This data suggests that the next competitive edge in retail may hinge not just on expediting deliveries to consumers, but also on enhancing the velocity of inventory movement within retail networks. For an industry that excels in customer experience, it appears that the paramount challenge now lies in optimizing back-end operations.

Long or Short, get news the way you like. No ads. No redirections. Download Newspin and Stay Alert, The CSR Journal Mobile app, for fast, crisp, clean updates!

App Store –  https://apps.apple.com/in/app/newspin/id6746449540 

Google Play Store – https://play.google.com/store/apps/details?id=com.inventifweb.newspin&pcampaignid=web_share