Delhivery inches closer to revenue goals with 2x growth; But will competition derail its plans?

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The FY 15-16 has been twice as good for logistics company Delhivery. Filings by the registrar of companies state that the delivery company’s revenue doubled during the year from Rs. 228 crore in the previous year to Rs.495 crore.

The firm’s revenue growth implies that there has been rising growth in its major ecommerce clients Flipkart and Paytm’s businesses. In February, IOS reported that online marketplaces are trying to add more PIN codes to their serviceable areas. This requires logistics companies to put their capabilities to the test by ensuring speedy deliveries.

Delhivery’s CEO, Sahil Barua said in October that the company will show profitability by the end of the month based on per parcel delivered.

He said, “We are a profitable company and this will reflect in our results for the fiscal 2018.”

He further added, “We are on track to hit $120 million (about Rs 816 crore) in revenue in FY 2016-17, which is an 80% growth over last year. We should deliver close to 75-80 million parcels during this period.”

Will competition stand in the way of its goals?

In spite of these goals, there are many other logistic service providers to compete with. Online logistics companies deliver about 1.2-1.5 million shipments in a day, claim industry experts.

Delhivery may have grown substantially in terms of revenue, but it still has a long way to go before it can enter the big leagues with firms like DHL and Blue Dart. These companies make an annual revenue of approximately Rs.3,000 crores.

Apart from these logistics firms there are in-house logistics channels like Ekart and Amazon Transport Services that the Tiger global backed firm needs to outdo. At the moment the in-house companies cover 65% of the total online marketplace delivery category. So, to turn the tables around Delhivery was involved with Alibaba to makes its deliveries in the Indian online retail market.

According to Prahlad Tanwar, the director for transport and logistics consultancy KPMG said, “They (Delhivery) have a significant threat coming from such in-house players which have the power to dictate terms. An early mover in this category was GoJavas, they faced stiff competition and is not operating anymore.”

The Indian online retail industry is expected to keep growing in spite of demonetisation. According to estimates from eMarketer, ecommerce business growth will fall from 75% to 55% this year due to demonetisation. But this is still growth that will require more efforts from logistics players like Delhivery.

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