Internal logistics gaps cost India’s organised retail sector over Rs 2,000 crore a year: Report

India’s organised retail sector is facing a major operational challenge as inefficiencies in internal logistics are leading to losses of over Rs 2,000 crore annually, according to a report by ClickPost. The study, based on data from 48 omnichannel brands, shows that delays in moving inventory within retail networks are locking up capital and affecting sales despite strong last-mile delivery performance.

The report analysed more than 15,000 stores and 7.2 million shipments between January 2025 and January 2026. It highlights that while retailers have improved customer deliveries, internal inventory movement remains slow and uncoordinated.

Real bottleneck inside the network

Retailers are efficient in delivering products to customers, but face delays in shifting inventory between stores and warehouses. These delays are driven by manual processes and poor coordination.

This results in unsold goods staying longer within the system, blocking working capital and reducing efficiency.

The issue becomes more visible during peak sales periods. In one instance, a 150-store fashion brand saw the time taken to return unsold inventory rise from 0.2 days to 13 days during end-of-season sales.

In January, the brand processed returns worth Rs 6 crore, which made up 72% of its seasonal inventory movement. Due to delays, Rs 2.6 crore remained tied up as working capital. Even after the peak period, return timelines stayed at six days, indicating a persistent issue.

Peak season chaos is costing crores
The report states that delays increase sharply during sale periods when volumes rise.

Around Rs 200 crore was stuck during one sale cycle due to delays in internal pickups, even when warehouses and logistics partners were ready.

Over a full year, such delays add up to more than Rs 2,000 crore across the sector.

A key factor is the reliance on manual systems. About 85% of brands still use emails and spreadsheets to manage internal logistics. This makes operations up to five times slower than automated systems.

For large retail chains, this can lead to delays of up to two weeks and losses of Rs 40–50 lakh per sale cycle. Over time, losses can exceed Rs 1 crore, excluding missed sales opportunities.

Performance levels also differ significantly. Manual systems achieve only 30–40% successful pickups on the first attempt, while automated systems cross 90%.

Shrinking cycles, rising complexity
The challenge is increasing as retail cycles become shorter and operations more complex.

Fashion cycles have reduced from around 90 days to 15–20 days, leaving little margin for delays. By the time inventory reaches warehouses, demand may already have shifted.

At the same time, sale periods now see volumes increase three to four times, adding pressure on logistics systems.

Retail supply chains now involve multiple points, including stores, warehouses and hubs, making coordination more difficult without automation.

Operational gaps are also visible in daily processes. Invoice errors occur in 10–15% of cases, leading to about 1,500 disputes every month. Teams spend nearly 65 hours daily resolving these issues.

Delays in inventory movement also result in 8–12% loss in potential sales during peak periods.

A Rs 2,000 crore problem
The report indicates that improving internal logistics could become a key factor for growth in the retail sector.

Brands that continue to depend on manual systems are losing between Rs 5 crore and Rs 15 crore each year due to inefficiencies. Across the sector, this results in an annual loss of more than Rs 2,000 crore.

The findings suggest that faster movement of inventory within retail networks may be as important as last-mile delivery in improving overall performance.