In today’s times, convenience and ease of services is something that is prioritized among consumers, both online and offline. Those companies which have been able to provide comfort, convenience and ease in facilitating their product or service have always found success in the competitive markets.
Several of India’s leading startups turned into unicorns owing to their unique, out of the box and convenient services. One such example is Delhivery, a successful Indian unicorn which is one of the e-commerce startups that transformed delivery services in the country.
Delhivery became a unicorn in the year 2019 when it was valued at $1.5 billion and raised $413 million. It is a logistics startup that focuses mainly on the e-commerce segment.
When we think about e-commerce, one of the major challenges in this industry is the issue of logistics and Delhivery is a startup that came up with all the right solutions to solve this problem, and that is what led to its growth. Let us know more about this unicorn.
How Delhivery Started?
The story of how this unicorn started is an interesting one. It was late at night when Sahil Barua and Suraj Saharan had ordered food from a nearby restaurant and started chatting with the delivery boy. They ended up at the restaurant itself and had a conversation with the owner. Upon knowing that the restaurant was going to shut down, they took on the task of hiring all the staff present there. This led to the start of the business of Delhivery.
Initially, the company started with trying to provide a solution to restaurants and their problem of delivering food under an hour. This was mainly because they saw a need for a delivery network for restaurants. That’s how they started out with hyperlocal.
Sahil and Suraj started by completing the delivery orders for the restaurants within half an hour. Later, they were joined by Mohit Tandon, Bhavesh Manglani, and Kapil Bharati.
Their business was doing good, and it was one of their investors who actually got them to start in the e-commerce sector as well. They realized that if they are able to do what they do with food delivery, why not look at the e-commerce sector and deliver packages as well.
They understood something that their competitors were not able to; traditional delivery and e-commerce delivery are very different, and there is a massive scope in the e-commerce sector delivery. That is how they made their transformation from hyperlocal to the e-commerce segment.
Delhivery Business Model
The Delhivery business model is the B2B model, where they provide services that are primarily focused on business people. Here, the businesses are charged, and the customers are charged nothing.
The services that the company offers can be broken down into three departments or verticals. These are- warehousing, transportation, and commerce. However, the majority of their business is focused on transportation. It follows a ‘plug and play’ model and provides a solution to all those customers who want to send out their products to their respective customers.
The services offered by Delhivery include last-mile delivery, transit, and third-party warehousing, reverse logistics, vendor to warehouse and vendor to customer, payment collection, shipping, etc. The company did not follow a hub and spoke model of delivery.
The method followed by them is the distribution model, where every branch of the company is operated as a hub. In this way, the parcels can be distributed to the customers without any problems.
The exact process involves that whenever a product is ordered online, it is picked up from the manufacturer and is sent to a processing unit, where it gets sorted for the destination city. This process is known as the first-mile operation. Then, a line haul is used to transport the products from the processing units to the destination cities. In the last mile operation, the product gets delivered from the delivery system to the customer’s house.
Competitors of Delhivery
When we look at the industry for Delhivery, we can look at it from two sides. One side would be the logistics industry as a whole, and the other would be the specific e-commerce logistics industry. Delhivery has tough competition on both ends, and it is not the only startup or unicorn in the industry either.
When we look at the logistics industry as a whole, there are 2 major competitors that the company faces. These big players are Rivigo and Blackbuck. Both these players are startups; where Rivigo is already a unicorn and Blackbuck is also nearing the unicorn status.
Rivigo is a tech-based logistics company, which establishes itself as a technology company rather than a logistics company. It’s main USP is that it is a relay-based trucking system and calls its drivers as ‘pilots’ rather than truck drivers.
Blackbuck is a technology-based company that offers an online marketplace for online transactions and provides third-party logistics services to other businesses. It is also known as Zinka Logistics Solution, and in its last round of funding, it raised approximately $150 million. It is not a unicorn yet, but it surely has its eyes set on that target.
In the logistics specific sector, Delhivery has some startups as its competitors. These startups, however, have much lower equity funds than Delhivery and hence, are at a slight disadvantage. These other players are Ecom Express, Xpressbees, Flexport, etc.
Funding Raised by Delhivery
Delhivery has gone through multiple rounds of funding. It went from a Series A Startup funding round to a Series F funding round, and in 2019, it raised funds from the Secondary Market as well.
In 2019, Delhivery raised $413 million in a Series F funding round and became a unicorn. This amount was raised from SoftBank Vision Fund and existing investors like Carlyle Group and Fosun International.
After that in June 2019 and September 2019, it raised $150 million and $115 million from Canada Pension Plan Investment Board respectively. So the most recent funds were raised from a Secondary Market round.
Delhivery’s first round of funding which was a Series A round was raised in April 2012. It resulted in $1.5 million being raised from Times Internet Limited. This is what led to the kickstart of growth in the future of Delhivery. It is aiming to reach an amount of Rs.220 crore in the coming years.
Growth of Delhivery
The logo of Delhivery says “Changing the world, one shipment at a time”. The company is attempting to change the logistics industry by trying to innovate and by coming up with new strategies every day.
The company grew and evolved from following a hyperlocal business model to focusing just on the e-commerce sector. With the industry being so competitive, Delhivery has experienced outstanding growth since its inception.
The major issue for logistics companies in the entire framework, which has to be built in regards to the infrastructure that needs to be created and the entire team or workforce that has to be hired.
These are the fixed costs that Delhivery had to incur, and these costs piled up to form losses for the company in its initial years.
However, the investors invested in the company, because they expected that the demand and volumes generated from the supply chain would pay off eventually, and when that would happen, Delhivery would make huge profits. Eventually, the expectations of the investors were fulfilled.
Delhivery claims to have an annual average growth rate of 65% since the financial year 2015, with 25% of e-commerce orders being delivered by the company. This unicorn planned to expand to 20,000 pin codes in the first quarter of 2020 and it also plans to use its fresh funds to invest in expanding its supply chain network to small and medium scale businesses as well.