New Delhi: India’s organised retail sector may be expanding at a rapid pace, but a hidden operational inefficiency is quietly eroding profitability, with internal logistics gaps costing the industry over Rs 2,000 crore annually.
A recent report by ClickPost highlights how slow and inefficient inventory movement within retail networks is acting as an “invisible tax” on businesses. The study draws on data from 48 omnichannel brands, covering over 15,000 stores and 72 lakh shipments between January 2025 and January 2026.
Internal logistics emerges as key bottleneck
While retailers have significantly improved last-mile delivery to customers, the report reveals that internal logistics — moving goods between stores, warehouses and hubs — remains outdated and inefficient.
Delays in shifting unsold inventory, reliance on manual processes and poor coordination are slowing down operations and locking up working capital. This inefficiency becomes particularly visible during high-demand periods such as end-of-season sales.
In one case cited by the report, a 150-store fashion brand saw its inventory return time surge from just 0.2 days to 13 days during peak sales. In January alone, the brand processed Rs 6 crore worth of returns — accounting for 72 per cent of its seasonal inventory movement — with delays tying up Rs 2.6 crore in working capital.
Even after the peak period, return timelines remained elevated at around six days, indicating a structural issue rather than a seasonal spike.
Peak season pressure amplifies losses
The report estimates that during a single sale cycle, nearly Rs 200 crore worth of inventory remained stuck due to delays in internal pickups, despite warehouses and logistics partners being fully prepared.
Over the course of a year, these inefficiencies add up to losses exceeding Rs 2,000 crore across the organised retail sector.
A key contributor to this problem is the continued reliance on manual systems. Around 85 per cent of brands still depend on emails and spreadsheets to manage internal logistics, making processes up to five times slower than automated systems.
For large retail chains, this can result in delays of up to two weeks and losses ranging from Rs 40 lakh to Rs 50 lakh per sale cycle. Over time, these losses can exceed Rs 1 crore, excluding the impact of missed sales opportunities.
Automation gap widens performance divide
The report also highlights a stark contrast in operational efficiency between manual and automated systems.
Manual processes achieve only 30–40 per cent success in first-attempt inventory pickups, whereas automated systems exceed 90 per cent efficiency. This gap significantly impacts turnaround times and overall supply chain performance.
Additionally, invoice-related errors occur in 10–15 per cent of cases, leading to nearly 1,500 disputes every month. Retail teams collectively spend around 65 hours daily resolving such issues, further draining productivity.
Shrinking fashion cycles increase urgency
The problem is intensifying as retail dynamics evolve. Fashion cycles, which once lasted around 90 days, have now shrunk to just 15–20 days, leaving minimal room for delays in inventory movement.
At the same time, sale periods now see demand surge three to four times, placing additional strain on already inefficient systems.
Retail supply chains have also grown more complex, often involving eight or more touchpoints, including stores, warehouses and distribution hubs. Without automation, coordinating across these nodes becomes increasingly difficult.
These inefficiencies are directly impacting sales, with the report estimating that 8–12 per cent of potential revenue is lost during peak periods due to delays in inventory availability.
A Rs 2,000 crore challenge for the sector
The findings suggest that the next phase of growth in India’s retail sector will depend not just on customer-facing improvements, but on strengthening backend operations.
Brands that continue to rely on manual systems are estimated to lose between Rs 5 crore and Rs 15 crore annually due to internal logistics inefficiencies. Across the sector, this translates into a cumulative loss of over Rs 2,000 crore every year.
While the insights are based on data from brands using ClickPost’s platform, the patterns point to a broader structural issue affecting organised retail as a whole.
Conclusion
India’s retail industry has made significant strides in enhancing customer experience and delivery speed. However, the real challenge now lies behind the scenes. Unless retailers address inefficiencies in internal logistics through automation and better coordination, the sector risks slowing down its growth trajectory despite strong consumer demand.
Bridging this gap could unlock significant value, improve profitability and support the next wave of expansion in India’s fast-evolving retail landscape.
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