A few of young men had an idea back when Zomato was only a restaurant listing website.
"Our query to them (Zomato's creators) was, 'Look, you guys are doing a terrific job of presenting things to consumers online.'" Obviously, the next step is to complete the order. Why hasn't somebody created a restaurant delivery network?"
As a result, Delhivery was born. It became the "delivery guy" for eateries in 2011. However, the business quickly realised that there was an even greater possibility in India's expanding e-commerce market.
At the time, e-commerce businesses like Flipkart and Snapdeal either fulfilled orders with their own small delivery teams or used the services of old-school courier companies that were better at delivering papers and shipping large shipments. They were old and sluggish, and they failed to meet the high expectations of the Indian customer. And these demands need a new type of concentration.
To bring everything together, you required a network of warehouses, last-mile distribution, and a powerful software platform. You also required well-organized backend systems to manage payments, especially cash on delivery, which was popular in the early 2010s. All of this, and more, was built by Delhivery.
Since then, its aim of becoming an e-commerce'third-party, last-mile logistics delivery organisation' (3PL) has been coming true.
According to a RedSeer research, Delhivery is responsible for 20 percent of all e-commerce delivery volumes in India. And the e-commerce industry now accounts for approximately 60% of Delhivery's sales (it was 89 percent of revenues in 2019). When you zoom in, you'll see that this mostly consists of the 'express delivery section,' which refers to your daily online orders weighing less than 40 kgs. In 2020, the express market in India was anticipated to be around $2.3 billion, and by 2026, it is expected to be worth $10–12 billion.
Delhivery will be hoping to take advantage of this. However, it also implies that Delhivery's destiny is inextricably linked to India's e-commerce future.
And this becomes all the more evident when you consider that just a few customers account for the majority of Delhivery's earnings. Sure, the firm has over 21,000 clients, but only five companies account for nearly 41% of its income!
While Delhivery hasn't revealed its top customers, it's plausible to presume that e-commerce behemoths Amazon and Flipkart are among them. While this may seem to be a premium customer, it also entails a different kind of danger. Amazon, for example, is developing its own logistics network to compete with third-party logistics providers in the United States. As a result, it's probable that they'll take a similar route in India. Meanwhile, Flipkart has invested strategically in competitor Shadowfax and teamed with Adani Logistics to bolster its supply chain infrastructure.
And if this tendency spreads across the industry, Delhivery might be in serious peril. "There is no promise that we will successfully keep all of our current core clients in the future," the business says. And it is a significant danger.
So, if e-commerce behemoths aren't going to carry Delhivery forward, what can it rely on?
The development of direct-to-consumer (D2C) businesses, to be precise. These are businesses who choose to sell their products on their own website or via social media. They generally specialise on one area, such as fashion or health food. And instead of working out the expenses and burdens of running a vast logistical arm, these folks would rather concentrate on providing a greater client experience.
According to reports, India's direct-to-consumer business, which is presently valued at $44.6 billion, might reach $100 billion by 2025. D2C shipments might increase by 6 times by 2026. That's exactly what Delhivery is hoping for.
Even if the large players invest in their own infrastructure, Delhivery may be able to rely on the emergence of direct-to-consumer (D2C) companies to fill the demand gap. And there you have it...a sneak peek at Delhivery's operations. With the firm possibly seeking a value of more than $5 billion, we'll go a little further into the data before the IPO.
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