Zomato-backed Shiprocket wants to move higher in e-commerce value chain

Shiprocket is betting big on WhatsApp commerce, says co-founder and CEO Saahil Goel

Shiprocket hitched a ride on the D2C wave that swept through the world since the pandemic days to emerge a unicorn. The thesis was simple: aggregate the services of logistics players like Delhivery, Xpressbees, Ecom Express, FedEx and Blue Dart on a single platform.

This allowed the small cosmetics or fashion brands to choose a logistics partner on the go and make their pick after judging factors like prices and ratings. Between FY20 and FY23, a rise in e-commerce adoption and the growth of new consumer brands helped the company grow its revenue from Rs 161 crore to Rs 1,089 crore.

But, the problem with logistics aggregation — where Shiprocket’s gross merchandise value exceeded Rs 25,000 crore ($3 billion) in FY24 — is that transporting goods is a very small part of the e-commerce value chain.

It is just 10-15 percent of the total spends of small and medium businesses (SMBs), according to Praful Poddar, Shiprocket’s chief product officer. In contrast, marketing accounts for 30-40 percent of spends and the cost of goods sold is in the range of 20-25 percent, he said.

That’s why the company has racked up a suite of 15 products to cross-sell to its customers such as tools for aggregating influencers for brands, automation of telemarketing, revenue-based financing, WhatsApp commerce, ONDC integration, and an API marketplace for data analytics.

“However, shipping will always remain the mothership,” insisted Poddar.

According to the company, the strategy to move up the value chain is already showing signs of paying off as 50 percent of its 100,000 monthly active sellers use at least three of the products.

“It is not just about increasing the gross merchandise value, but the average revenue per user (ARPU)... And it is better when the ARPU increases due to high margin products like marketing,” said Sunil Kumar, chief technology officer at Shiprocket.

The company, backed by the likes of Zomato, McKinsey and Tribe Capital, has raised over $350 million in funding across 12 rounds, according to financial data platform Tracxn. It is reportedly looking to raise a fresh round of funding at a flat valuation of $1.2 billion.

Betting big on WhatsApp

Of all these value-added services, Shiprocket seems to be most keenly focussed on WhatsApp-led commerce. This is because the company sees 30 percent of all its transactions are manually entered on the platform - which means they originate on chat interfaces of social media apps - of which WhatsApp is the biggest in India with more than 500 million users.

“We're betting big on WhatsApp. For the SMB universe, it's a very powerful tool. And it's actually a very powerful distribution channel because it's there with everybody in India. So, there's going to be more work on WhatsApp that you will see in the market, and from ourselves in the next 12 to 24 months,” said Saahil Goel, Shiprocket co-founder and chief executive officer.

As of now, the company has integrated its SaaS dashboard with WhatsApp in a way that merchants can set up a shopping experience on the messaging app within ‘10 seconds’, according to the company.

“A lot of discovery, lead nurturing, and what the product is about are still happening on WhatsApp. But closure of the order probably is not happening because a lot of that is still cash on delivery,” said Poddar.