Logistics company Delhivery expects the e-commerce industry shipment volume to grow at an average rate of 15-20 percent in 2023. The company is expecting steady growth in the segment with firms like Reliance Industries, Unilever and Dabur entering the space.
“In any quarter there is going to be volatility in the e-commerce space and individual players might go through ups and downs, the broad arc continues to remain positive. New entrants like Reliance, Unilever and Dabur are entering the direct-to-consumer brands, so our view remains positive,” Said Sahil Barua, founder and chief executive officer of Delhivery while addressing the analysts and investors during the company's earnings call held on February 11.
Barua’s statements come in at a time when e-commerce companies’ sales came under pressure as there was an inflation-led slowdown in the market at the beginning of 2022.
“I think the reality is that the last year was slower than people expected, partly because a lot of growth had been pulled forward during the COVID period. But I don't think that fundamentally alters the path for e-commerce in the country,” Barua added.
Part Truck Load Business Growth
On the Part Truck Load (PTL) business, Barua said that the market grows anywhere between 10 percent and 12 percent a year and said that there is more potential for growth as the transition from unorganised players to organised ones is happening at a faster pace.
“The market moving from unorganised players to organized players. Organised players used to be a very small portion of the market and that is changing…There is also a shift from non-express part truckload to express part truckload, as the quality of roads improved and the average form factor of trucks is improved,” Barua said.
Delhivery reported a net loss of Rs 195.7 crore for the third quarter of FY23 (2022-23) against a net loss of Rs 127 crore a year earlier, the company said in a stock exchange filing on February 10.
The firm’s operating revenue fell to Rs 1,823.8 crore for October-December 2022 from Rs 2,019 crore a year earlier.
Sequentially, the logistics unicorn reported a marginal growth in revenue as revenue from the partial truckload freight segment declined more than 5.5 percent from a quarter earlier to Rs 277 crore. However, the company reported a 7 percent sequential growth in the express parcel services business, which bolstered the revenue number.
Cost optimisation continues at Delhivery
Barua also shared various cost optimisation measures that the company has adopted to improve efficiency and unit economics.
“Significant improvement in service quality as you consolidate locations and larger trailers also improve service levels with time,” he said, adding that the technology systems and monitoring systems at the company have also been significantly improved in the last four months.
“As a result, in the express space for instance we see misrouting of parcel services come down by 40 percent with our new data science tools that are launched in the later part of last quarter,” Barua said.
Mergers and acquisitions in 2023
The company is also looking for acquisition opportunities in 2023.
“The Indian market is rapidly changing. There's a huge change from unorganised players to organised players. And as that happens, there is an opportunity for us to consolidate the market under us,” Barua said.
In August of 2021, Delhivery acquired the Bengaluru-based Spoton Logistics, a move aimed at further strengthening its B2B capabilities.
In December of 2022, Delhivery also acquired Pune-based Algorhythm Tech for Rs 14.9 crore in an all-cash deal to enhance its integrated supply chain solutions offering.
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