How Delhivery Is Enabling Growth Of D2C Brands With Tech-Driven Shipping Stack

As in-store retail shrank during the pandemic (2020-2021) and drove consumers to online shopping for convenience and safety, there was a massive shift towards direct-to-consumer (D2C) model – selling without involving wholesalers or distributors. 

The D2C market in India is worth $50.8 Bn in 2022 and is estimated to reach over $300 Bn by 2030, growing at a CAGR of 24%.

The pandemic is on the wane now, but industry experts think D2C brands will thrive in the new normal. Market data supports it. Between FY20 and FY21, D2C brands recorded a 39% YoY increase in total sales, according to an Inc42 report. 

Although the pandemic boosted digital-first brands, building an in-house supply chain is a costly affair for many new-age brands. On the other hand, legacy players and deep-pocketed marketplaces with solid distribution networks can quickly spread across semi-urban and rural India to grab more market share.

However, it is the cost (of logistics) that is squeezing D2C brands at this point. D2C brands have expanded beyond FMCG (fast-moving consumer goods). They are also increasingly gaining traction in the fitness equipment market, which are costly to move around. This, combined with high costs of petrol and workforce and lack of road infrastructure can significantly lead to higher logistics costs. 

According to an Inc42 survey, apart from marketing spends, D2C brands see high logistics costs as a significant threat to growth. Fifty D2C brands, surveyed by Inc42 said that they spent $40 Mn on logistics in FY21, a 42% YoY surge in aggregate logistics expenditure from the previous year. 

Industry experts also observe that the biggest bane of the D2C brands happens to be delivering products at free/low shipping charges. 

Here is an interesting use case. As a rule, D2C brands shipping low-cost (INR 1K or less) products pan-India will see a drastic dip in profit as the margins are pretty low. 

But in a convenience-driven world where every brand is wanting to one-up the other by offering time-bound and fast deliveries, choosing the right logistics provider is of key importance. 

Gurugram-based logistics giant Delhivery aims to empower India’s D2C brands with its tech-enabled, efficient solutions. With its delivery network spanning over 18,454 pin codes, the giant aims to solve the cost dilemma for brands. 

The company was set up in 2011 by Sahil Barua, Mohit Tandon, Bhavesh Manglani, Suraj Saharan and Kapil Bharati. It is a full-service supply chain player offering express delivery, freight/transportation (partial and full truckload shipping), cross-border deliveries, warehousing and order fulfilment, among others. 

It works with more than 29,200 customers, including marketplaces, D2C brands, SMEs, and has onboarded 38,624 last-mile delivery agents. With a pan Indian presence spanning 35+ cities, Delhivery has enabled 1.7 Bn deliveries across India to date. 

Backed by marquee investors, including SoftBank Vision Fund, Nexus Venture Partners and Carlyle Asia Partners, the logistics unicorn made its IPO debut on May 11, 2022, at a $4.55 Bn valuation. 

In May, the company disclosed that its revenue from operations grew 89% to INR 6,882.2 Cr during FY22.

Cutting Logistics’ Gordian Knot, The Delhivery Way 

During Inc42’s D2C Summit 2022, Delhivery’s SVP of sales and marketing, Rohan Shanbhag pointed out, “When brands leverage too many logistics partners for different shipping requirements like warehousing, inventory management and last-mile delivery, the cost goes up.”

Lately, the market has been crowded with a slew of third-party logistics (3PL) aggregators and independent courier/shipping companies. These include names such as DHL, DTDC, Xpressbees, Blue Dart and Shadowfax. 

The question is, how do companies make the right choice?

This is where Delhivery’s full suite of logistic solutions comes into the picture, said Rajaganesh Sethupathi, head of enterprise solutions at Delhivery. “We have 11 years of experience in logistics and have developed and modified our solutions in sync with market trends.”

Here is a close look at how Delhivery is enabling D2C brands to navigate around logistics challenges with the help of its tech stack and enhancing customer experience for better business growth.    

Delhivery’s 5 Cutting-Edge Solutions

Inventory Optimisation

D2C brands need to monitor inventory in real-time to ensure orders are not sitting in warehouses and adding up to supply chain costs. 

Delhivery’s proprietary warehouse management system allows D2C brands to manage multi-location, multi-channel warehousing. Brands can optimally place the right amount of inventory at the right location based on seasonal fluctuations in order volumes and demand pattern. Brands can use order allocation algo to choose an optimal warehouse to serve the order from.

In addition, brands can combine their warehousing and freight solutions to ensure fast and cost-efficient offline distribution.

Cost Optimisation

Delhivery offers a suite of supply chain services to help D2C brands optimise costs. It combines its warehousing and transportation operations, infrastructure, network and technology – built on deep data science and business intelligence capabilities.

Its 90+ warehouses are located strategically across 35+ cities(to bring inventories closer to customers). Plus, tech-based solutions such as smart route optimisation and geocoding for last-mile deliveries and real-time fleet tracking — all help D2C brands reduce costs. 

Moreover, since Delhivery offers a varied range of solutions – from data analytics, cross-border and express deliveries,  partial truckload and full truckload shipping (PTL and FTL) and more, brands can avoid leveraging multiple shipping partners for varied needs. This, in turn, helps cut logistics costs.

Data-Driven Capabilities

“We have developed our AI platform after analysing more than 1.7 Bn order data points from our successful deliveries until now. In fact, the more data you add to the algo, the better it functions,” said Shanbhag.

The company claimed that the AI tool ingests, assimilates and learns from more than 1 Bn data points, 30 Mn addresses, 4 Bn vehicle GPS trace points, and 2,700 Terabytes of computer vision data.

This data gets collected via GPS, CCTV cameras, and internet-connected devices. Delhivery leverages data-rich insights to build intelligence involving last-mile delivery, address correction, vehicular movement, and warehouse operations.

NDR Management & Reverse Logistics

Many times, orders are returned to origin (RTO) due to several reasons such as damage, unavailability of a customer or an order could not be delivered as the customer’s contact details were wrong or incomplete.

In such scenarios, proactive engagement with the customers is very important.

Delhivery’s NDR (Non-Delivery Report) management system enables brands to identify potential RTOs or undelivered items (due to wrong addresses or unavailability of the consumers). 

Delhivery sends the non-delivery report to the consignee over WhatsApp for verification, without manual intervention. This automated real-time consignee verification helps brands improve reattempt deliveries by 10%,  it claimed.

The company further added that its doorstep QC (quality control) procedure for return shipments can further cut costs and elevate CX. Last-mile agents can perform a QC on the brands’ behalf at the customers’ doorstep. This helps in filtering out wrong/defective products. Brands can even initiate the refund process immediately which helps improve NPS (net promoter score), the company said.   

How Logistics Optimisation Can Push D2C Growth

Holding a competitive edge in a crowded space is no easy proposition, especially in a market where customer loyalty is fading fast and instant gratification rules. Therefore, the entire logistics mechanism, a customer service-driven function, has emerged as a core business operation. After all, nothing enhances a brand’s value more to customers than the timely and reliable delivery of products free from damage.

Logistics remains a growth-critical element as online shoppers from the Indian hinterland are expected to peak at 54% of total e-shoppers by 2030, accounting for 24% of online spending. This can be a tremendous fillip to D2C brands if they can cater to the country’s far-flung areas to keep up with the fast-evolving market dynamics.     

As new-age, disruptive brands are heavily leaning on tech-driven logistics solutions which are accurate, cost-effective and scalable, India has witnessed a burst of logistics activities. 

According to Statista, the country’s overall road logistics market is expected to reach $330 Bn by 2025, growing at a CAGR of 8%. Moreover, nearly 63% of the total demand will come from on-demand intercity logistics, which indicates a rise in integrated, door-to-door solutions by Delhivery and its ilk to meet the brands’ newfound demand across rural India.   

“We have a presence in several deep pockets of the country and can help brands expand their reach while ensuring a seamless CX,” said Shanbhag. 

It also enables the quick commerce segment through its micro fulfilment or Intracity warehousing network. Delhivery is currently building capabilities to service time-bound, last-mile deliveries and offers the service in 10+ cities. However, the Q-commerce hyperlocal delivery is still an urban fad and may not serve D2C brands at large. 

The real game-changer for brands will be creating a pan-India logistics network while keeping costs low. And this is where the government’s National Logistics Policy (NLP) can help.

In September 2022, the Centre rolled out the NLP to ensure quick last-mile delivery. It also aims to bring down logistics costs from 13-14% to 10% by improving supply chain efficiency through robust tech infrastructure and enhanced connectivity.

This can be a big boost for D2C brands and tech-enabled logistics providers like Delhivery. When the conditions are favourable, the latter can onboard more SMEs, driver partners and other stakeholders to help restructure the unorganised sector and make it both efficient and affordable. 

Shanbhag said that reducing logistics costs would boil down to creating a more efficient supply chain. For D2C brands, he also had one piece of advice. “Choose the right enabler and optimally plan your fulfilment models so that you can focus on the end consumer.”