Exponential growth of e-commerce in India over the last 2 years has created a massive opportunity for courier and fulfillment services in the segment. This has benefited existing courier companies like Bluedart and also led to the emergence of e-tailing focused companies like GoJavas, Delhivery and Ecom Express. They have invested heavily in technology and are a step ahead of competitors when the next wave of innovations hit the market. For example, they data mine the entire route of package delivery at the last mile from Distribution Center to Consumer Premises.
In addition, 45-50% of the market is captive with Flipkart, Amazon and Snapdeal each having its own courier service viz. eKart, Amazon Transportation Services and Gojavas respectively. Delhivery is the largest e-tailing focused third-party courier service in India.
The majority of Delhivery’s revenues currently comes from transportation services which involves parcel deliveries. Delhivery currently delivers ~120k parcels per day. Its customers in this segment include large e-tailers, niche e-tailers, online merchants and enterprises (omni-channel services to large brands). In fulfillment services, Delhivery offers warehousing services typically on a variable basis with key customers being online merchants and enterprises. Its technology offering provides inventory and dispatch management applications to merchants and is at a nascent stage.
Delhivery has expanded its reach to 3k pin codes (of a total of 40k pin codes in India). It has 550 last mile delivery stations and employs 8k people – number of stations have increased 3x and employees have increased 2x in the last 12 months. It plans to cross 1000 stations by 2015 end. We understand that Delhivery’s key differentiation is its focus on last mile delivery – it aims to have a delivery station within 3km of every customer implying a distributed model rather than a hub and spoke model. This leads to high fixed costs but results in significant operating leverage.