DTDC bets on rapid commerce, targets smaller towns with 2–6-hour delivery

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Leading integrated express logistics provider DTDC is venturing into rapid commerce with a delivery model promising deliveries in two to six hours that leverages its existing logistics network, pitching it as a more scalable alternative to 10-minute quick commerce, chief executive officer Abhishek Chakraborty told Moneycontrol in an interview.

The courier major, now in its 35th year, is betting on demand from tier-2 and tier-3 towns—where it says shared “dream stores” and smarter unit economics will make same-day delivery viable across categories like electronics, fashion and health supplements. The company's venture, DTDC Raftaar, will work directly with D2C and mid-sized brands by offering “dark store as a service”, helping them deliver quickly without heavy upfront logistics investments.

"The whole idea is that it's dark store as a service, plug-and-play model. You as a brand don't have to load all the front-ended costs. You get it on a per package basis. In the dark store,   we can have more than two or three brands, non-competing brands that tend to operate together, and all of them get to get the shared value of the unit economics," said Rahul Sanghvi, managing director and partner, leads logistics, for BCG India.

DTDC and BCG jointly released a white paper on the emergence of rapid commerce on August 22.

Within e-commerce, there is the traditional two- to three-day delivery and then quick commerce with 10–15 minutes. Rapid commerce is the space in between—two- to six-hour delivery. DTDC is planning to leverage its existing storage facilities and network of 100,000 riders to tap into this segment.

“In our mind, rapid commerce is going to be a pan-India phenomenon. Unlike quick commerce, which is more urban/city focused, this model works for both metros and tier-2/3 towns,"  Chakraborty said, noting an 'aspirational' trend in India's smaller towns which will fuel the demand.

"Consumers in tier-two, tier-three towns are watching the same online content. They have the same smartphones. So the aspirations are the same. So they also want convenience. But in purely economic terms, the 10-15 minute delivery may not work. And that's where we feel rapid commerce, which is offering a saner convenience, can work. At the right price point, at the right economics, that's where we see this story playing out in tier-2 and 3 cities," he said.

The company will focus on categories including electronics, accessories, apparel, cosmetics, food supplements and even B2B spare parts. However, it will not offer perishable items like groceries. It sees average order value in the range of Rs 1,200–1,500, compared to about Rs 400–500 in quick commerce. Around 55 percent of DTDC Rs 150-crore capex this financial year will be spent for the rapid commerce service. The new service is already available in  Delhi, Mumbai, Kolkata, Nagpur, Agra,  Kanpur and Bengaluru. DTDC expects Raftaar to go live in 30 more cities in the next two quarters.

"It's an evolving space, that's why we felt it's more valuable because right now brands are also learning how to deal with (a host of services)... There is e-commerce, there is quick commerce, so it's meant to be like a thought starter for brands as they think about their fulfilment models," Sanghvi explained.