Online brands’ logistics paradox—can’t live with them, can’t ship without them

Founders of D2C brands across sectors—jewellery, perfumes, homeware, skincare, clothing—detailed operational chaos stemming from logistics issues that they find difficult to resolve.

“Wallets are a big issue. They (logistics providers) deduct the money first, and then you’re left to dispute,” said the founder of a Mumbai-based jewellery company.

“ ₹20,000 was charged for a 1 kg parcel meant to be delivered just 10 km within Mumbai. The amount was deducted before we could dispute it. Now our wallet shows a negative balance,” the jewellery brand’s founder said, speaking on condition of anonymity, as did the other entrepreneurs mentioned in this article.

The company processes about 10,000 monthly orders, with an average order value of ₹1,000-1,250, fluctuating by city and season.

In the wallet system used by logistics partners, D2C companies preload funds that are automatically deducted for each shipment based on estimated charges. If there’s an error—such as miscalculated weight—the amount is still deducted upfront, requiring D2C brands to dispute the charge later.

“There are also issues with return shipments,” said the founder of a Bengaluru-based clothing company handling 500 monthly orders at an average order value of ₹1,000-1,500. “A customer might return a 200-gram item, but the logistics company packs it in a much larger box. The weight gets bumped up, and the return charge is deducted from our wallet with no explanation.”

An Ahmedabad-based owner of a three-year-old company cited another issue with returns—logistics partners returning shipments without an explanation or occasionally incorrectly marking those as declined by customers.

“Sometimes, if the customer asks for delivery on a later date, there are high chances that no reattempts will be done and the delivery partner will just mark the customer as unavailable thrice and it will come back to the brand. This means we have to bear the cost of forward and return logistics three times,” this person said.

“We’ve had orders marked as cancelled after reaching the destination city, and were charged arbitrarily for the return trip,” said the founder of a perfume brand. “Later, we found the cancellation didn’t happen from either end—not us, not the customer—and we had lost both money and the customer.”

The blame game

India’s D2C e‑commerce market is expected to grow from $87.5 billion in 2025 to $267 billion by 2030, a compound annual growth rate of 25%, according to a recentreport by industry analyst Mordor Intelligence.

While D2C companies initially focused on scaling up their own digital platforms, which involved heavy reliance on logistics partners, they are now increasingly selling from other online platforms as well, including quick-commerce, to reach more customers.

ITC Ltd, which sells packaged food and beverages, in June shut its standalone online store, ITC Store, to focus on a broader digital strategy that in 2023-24 accounted for 31% of its consumer goods sales, nearly doubling from 17% in FY20, according to ITC’s FY24 annual report.

Some D2C companies see the quick-commerce route as a tradeoff—wider reach, but tighter inventory pressure.

“It gives us agility, but overstocking ties up capital; understocking means missed demand,” said the founder of a Delhi-based skincare company.

Still, there’s a hidden upside. “When a customer orders our product on Zepto or Blinkit, they’re buying from the platform, not directly from us. So if something goes wrong, it’s Blinkit they will contact, not our company,” the founder added.

In the direct route, D2C companies said they typically get blamed even if it’s their logistics partner that’s at fault.

The founder of a Gurugram-based perfume company recalled losing a ₹10,000 order—far above the firm’s ₹1,000-2,000 average order value—after a logistics partner tried to enforce a one-time password for a customer. The failed delivery resulted in a cancelled order, and the brand had to pay for the parcel’s return.

“The customer was abroad and couldn’t provide it. We had no idea until she blamed us,” the founder said. “The customer doesn’t blame the courier; they blame us.”

“Sometimes a package arrives damaged or scrunched up, and customers name and shame us on social media even though we had no hand in it,” said the founder of a Gurugram-based homeware company that ships about 2,000 orders monthly at an average order value of ₹4,000-5,000. “Unboxing is the biggest touchpoint, and we lose that moment of trust.”

A louder pain point

For logistics companies, the D2C segment remains small, as typically only 10-15% of a D2C company’s revenue flows from their own websites, with most orders flowing through aggregators and quick-commerce platforms, said Karan Taurani, vice president, at Elara Capital, an investment bank.

Moreover, the problems could also stem from the D2C company’s end, Taurani said. “Their websites might not be technologically robust enough. Plus, there’s the challenge of demand and supply mismatches.”

Yet, it’s not viable for D2C brands, even for large ones, to handle the logistics themselves due to the high capital costs involved, Taurani said. Logistic providers remain essential but must offer more control and transparency, he added.

A spokesperson for Delhivery Ltd, among India’s largest third party logistics providers, said the company’s “return rates for COD (cash-on-delivery) parcels continue to remain consistently below industry averages, especially for D2C and SME (small and medium enterprise) customers”.

“Our loss and damage rate has consistently remained below 0.07% of all parcels shipped through the network,” the spokesperson added in an email response to Mint’s queries.

A spokesperson for Shiprocket Pvt. Ltd said the logistics provider’s “network is being finetuned for the needs of digital-first brands”.

Chirag Taneja, chief executive at Gokwik, a company that works with D2C brands, said the return-to-origin rate for shipments that have been paid for before despatch is 2-3%, while for cash-on-delivery orders, the rate shoots up to 25-30%.

“Couriers tend to prioritise prepaid orders first. COD deliveries often happen later in the day—and if there’s no time, they may mark them as attempted even if they weren’t,” Taneja added.

However, Prashant Gupta, partner at management consultancy Kearney, said logistics partners typically operate common networks where D2C parcels are treated no differently from marketplace shipments.

“If a 3PL (third-party logistics) hub faces an operational bottleneck, the delay affects everyone equally,” Gupta said.

However, the perceived impact differs. For a D2C company shipping about 5,000 parcels a day, delays involving 100 parcels would account for 2% of its total shipments, but for an online marketplace it would be less than 0.1% of its shipments.

For D2C companies, Gupta said, this is a much louder pain point.