Indian start-up delivery firms are cashing in on investors’ appetite to finance ‘disruptive’ new business models by raising hundreds of millions of dollars to rapidly roll out delivery networks for the country’s booming e-commerce sector.
Internationally little-known companies such as Ecom Express, Delhivery and Big Basket have all recently raised substantial sums to expand their operations. These technology-driven operators are competing with established players such as Blue Dart Express, Gati, DTDC and India Post to grow into leading B2C parcel firms.
At the same time, leading Indian e-commerce firm Flipkart is also expanding its delivery network to secure its competitive lead over Amazon, which is investing a massive $2 billion in India.
According to the Indian Express newspaper, e-commerce logistics companies raised a combined total of $100 million in 12 deals last year. But this figure has already soared to a mind-boggling $3,000 million in the first six months of this year.
Delhi-based Ecom Express raised Rs 8,500 million ($133 million) earlier this month in fresh funding from international private equity firm Warburg Pincus. The company, which delivers to 210 cities and towns across the country, expects to handle about 50 million packages this year. Ecom Express plans to use the new funds to expand its network beyond the main Indian cities into tier 3 and 4 towns and rural areas, and also invest in technology and sorting systems.
In May, SSN Logistics, the parent company of Delhivery (a mix of ‘Delhi’ and ‘Delivery’), raised $85 million from diverse investment companies in its latest round of financing. It will use the funds to build 20 fulfilment centres and nine fully automated sorting centres and extend its network. Launched in 2011, Delhivery currently serves some 150 cities via a network of fulfilment centres and local delivery operations, claiming delivery times of 12-48 hours.
Delhivery CEO Sahil Barua told the Indian Express: “We have always been a cost-effective company and that has worked in our favour. Moreover, we are now trying to bring down the cost of delivering per box from $2 to 55 cents.”
Other fast-growing e-logistics firms are Go Javas and Roadrunnr. Meanwhile, in the online food delivery business, there are diverse start-ups trying to bite off a piece of the pie.
Bangalore-based Big Basket, which claims to be India’s largest online food and grocery store with over 14,000 products, recently bought local firm Delyver with the aim of rolling out 90-minute deliveries to 50 cities. The firm, which currently operates in Bangalore, Mumbai, Hyderabad, Pune, Chennai and Delhi, has reportedly raised Rs 3,000 million ($47 million) in the last eight months and is planning to open warehouses in 10 major cities. It offers timeslot-based deliveries, including same-day delivery of pre-noon orders.
Other aspiring online grocers include Goodservice and Swiggy while fast-growing delivery firms such as Grofers and PepperTap focus on delivering online orders of goods from local stores.
Meanwhile, e-commerce market leader Flipkart, which last year raised a headline-grabbing $1 billion to upgrade its operations, is apparently also seeking to expand its existing large-scale delivery network to see off the challenge of these new arrivals as well as Amazon.
According to media reports, Flipkart plans to invest $80-100 million this year to strengthen its supply chain capabilities and build up e-Kart, its logistics operation, to offer rapid local deliveries. In parallel, it has linked up with the world-famous ‘Dabbawallas of Mumbai’, who deliver countless lunchboxes punctually throughout the crowded metropolis, to deliver Flipkart orders at the same time.
At present, the e-commerce giant, with over $1 billion in annual sales, offers same-day delivery of pre-noon noon orders in 10 cities, and next-day delivery in more than 65 cities across India, using six regional warehouses and diverse courier partners.
