Delhivery losses 4 times higher than before; What’s causing the money drain?

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Delhivery is close to its revenue goals with 2x growth in the previous financial year. IOS reported that the company’s revenue doubled from Rs.229 crore to Rs.524 crore. However, for the same year (FY 2015-16) the ecommerce logistics provider reported losses of about Rs.317 crores. This information was obtained through Tofler, a business research platform that derives data from the Registrar of Companies.

Losses faced by the company appear to have jumped four times higher than its previous year’s losses which were Rs.71 crore.

The Sahil Barua and Mohit Tandon founded company is valued at Rs.338 crore. It raised $85 million from its financial backer Tiger Global and now has a total of $128 million as funding.

Could competition be blamed for losses?

Online retail players use their own logistics providers. Flipkart has Ekart, Amazon has ATS, Snapdeal is dependent on Gojavas and Paytm is using LogiNext a Mumbai-based logistics provider, in which it has a major investment.

That’s not it, other logistics providers like DHL, are all betting big on the Indian ecommerce market. To strengthen its position from the perspective of ecommerce, DHL plans to invest €70 million in its business in India.

This makes it difficult for Delhivery to derive business from the big ecommerce players with the most orders.

However, Dlhivery’s not the only one with problems. Flipkart’s Ekart was primarily an online order pick up service, but it failed to gain momentum. As a result, Ekart Courier now has an offline presence. It will be offering offline drop-off and pickup centres soon.

Trouble with internal affairs

Besides competition, Delhivery faced some problems with its acquisitions from last year. The company had to close down its tech-enabled hyperlocal logistics company Opinio, by Mayank Kumar and Lokesh Jangid. Opinio assisted small businesses like grocery stores and restaurants.  In series A it obtained $7 million from Delhivery, Accel Partners and Sands Capital.

Could the loss of finances here be another reason for the four times increase in Delhivery’s losses?

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1 Comment

  1. Vinayak Goyal Reply

    You might be wrong with Snapdeal depending on gojavas as courier partner, as gojavas has essentially shut down(only completing the rto shipments for now) due to Snapdeal investing in them and then shutting down their operations and thus Snapdeal is more dependent on Vulcan for both first mile as well as last mile logistics. Even all the fulfillment centers are being converted to Vulcan controlled.

    Please correct if I’m having any wrong facts.

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