Recently Flipkart raised $1 Bn in funding to which Amazon responded with a fresh investment of $2 Bn in India. Snapdeal is in talks to raise more than half a billion dollars. Few months back, Flipkart acquired Myntra, one of the largest e-seller of apparels and fashion clothing.
Clearly, Indian ecommerce is picking up big time on the global scale and consolidation is in the air.
With these consolidations, hardly two to three large players are left who will compete for the same set of customers. Who will win? I think the one who can keep his customers satisfied and engaged.
As Mukund Mohan rightly says in one of his post, where he compares Flipkart and Amazon on the scale of customer satisfaction, “the game is not about the amount of money raised or invested by either company, but more the extent they go to make customers happy”
Now in a market like India, one of the main customer touch points of Ecommerce industry is logistics. Timely delivery of products, collecting returns, product delivery experience, new and innovative ways of accepting payments and other services around products shipments is going to be the game changer for Indian players. So, logistics still remains one of the biggest challenge for Indian ecommerce players.
In the past both Flipkart and Jabong had launched their own logistics arm, eKart and GoJavas respectively. Snapdeal had launched its own fulfilment service, SafeShip. But each of them have burned their hands in doing things which do not fall in their area of expertise.
To disrupt the warehousing, fulfilment and logistics, or in short, the supply chain industry using technology, three friends Sahil Barua, Mohit Tandon and Suraj Saharan, who were working together in Bain & Co, came together to start Delhivery. Later on the trio was joined by Bhavesh Manglani, and Kapil Bharati. The startup has created new milestones in the logistics industry in India. It started of as a shipping company and later kicked off as an ecommerce enabler which now sustains more than 2500 employees.
However, shipping still continues to be the largest chunk of their business. “In the 3 last years, the team has worked to diversify the company from Shipping to ECommerce” says Mohit, co-founder of Delhivery.
The company provides all the technological and supply chain services to anyone who wants to go online, shipping being one part. It started of as an end-to-end shipping, with services only in Delhi NCR ,and now has spread their wings to over 160 cities in India.
Some of the services that the company offers include:
The company has grown to 70k shipments per day across 160 cities. The services provided are Same Day Delivery, Plan-Super Plan services, Reverse logistics.
Fulfillment and Sourcing Services
In case of marketplaces where the vendor directly ships the products, there are a lot of control issues. In such a scenario Delhivery’s fulfillment services provide them with warehousing and packaging solutions. This means that there are shared warehouses where any vendor can come and stock goods and Delhivery will ship items for them. Thus, companies don’t need to own a warehouse and can instead use Delhivery’s warehouse for stocking products.
With this, it also gets sellers on board who keep the inventory with Delhivery. Then it helps the sellers in uploading their catalogues on various marketplaces And whenever an order comes in, Delhivery packages and deliver.
Also on the business end, warehousing, fulfillment still remain the worst of nightmares. Either they are investing on their own or are outsourcing it. In case of outsourcing the challenge is to manage different vendors for different services of the same domain.
Here, Delhivery acts as a perfect partner providing 360 degree solution.
Delhivery also provides technology and software solutions to its vendors and other companies. There are times when the seller doesn’t want to stock inventory with Delhivery. In those cases, he can use the company’s system as a pure technology solution, in which he can use the features provided by Delhivery like generating barcodes, list down marketplaces, etc.
Usually, Vendor/Seller has to keep track of various marketplaces, constantly log on to them to check whether he has received orders. And every marketplace has its own courier logins. So the vendor faces a tough time logging in to various marketplaces and also logging into their courier platforms. “It becomes a nightmare for them” says Mohit. Thus by using the tech services provided by Delhivery, the vendor gets to see all the orders in one single panel and it becomes easier for him to manage all the dispatches and orders.
Generally the technology platform is used by the small vendors as sometimes these vendors have the mindset to not stock their inventory with somebody else. Hence, they like to use the software rather than investing in inventory in the first go.
Delhivery also helps the players to go online from scratch from website development, to helping them with digital marketing, keeping the inventory and also helping them to ship from store. The company has integrated with brands like Shopify, MartJack, Zepo, etc. and is soon going to take one brand online.
What’s more exciting is that the company plans to open up Kiosks in stores as well.
Suppose a customer walks into a store and picks up an apparel, however the size that he/she wants is not available. In this case he/she can go the Kiosk, see whether the size is available in some other store. He can make payments online or use COD and ask for the product to be delivered to their doorsteps. Or he/she could come back to that respective store later and pick up the product. In the meantime, Delhivery would ship the product from the warehouse to that specific store.
Despite the various additions into its business model, 90% of revenues that Delhivery earns still comes from shipping and with competition from players like Bluedart, DTDC etc., it still manages to be the leader in the market for ecommerce shipping in India. Currently, it gets around 65k-70k orders per day, out of which they process approximately 9000 orders a day.
However, it’s still growing when it comes to its Fulfillment service. “If one looks at it closely, one could say that 66% is shipping cost and 33% is fulfillment” says Mohit. Delhivery receives about 5000 orders per day across 3 warehouses (Delhi, Mumbai and Bangalore) in Fulfillment services.
Delhivery had raised nearly $5 Mn from Nexus Venture Partners in a series B funding round in 2013 and is currently in talks with investors to raise $30 Mn in a fresh round of funding.
The ecommerce industry is expected to reach $70 Bn by 2020. As KPMG and IAMAI report rightly put it – only around 10,000 out of 50,000 pin codes in the country are covered by courier companies. The rise in courier services is extremely important to accelerate online shopping as deliveries are mostly done through them. Hence, Delhivery and all the companies in the same segment have a lot of opportunities that remain untapped.