Enabling e-commerce

Enabling e-commerce

From being an express logistics service provider for the e-commerce sector, Delhivery has slowly but surely transformed itself into a 360-degree e-commerce enabler. Today, it offers a suite of technology-enabled services from setting up a web store and order management to fulfilment and shipping

MADHUMITA PRABHAKAR

(L – R)SAHIL BARUA, MOHIT TANDON, BHAVESH MANGLANI, KAPIL BHARATI, SURAJ SAHARAN, FOUNDERS, DELHIVERY

The initial idea behind setting up Delhivery was to simplify logistics for the e-commerce world. “This sector was facing huge challenges around delivery timelines, cash management and returns management.  And, large courier operators operated on models designed for different industries. They did not have the expertise to understand the offline payments model, and the nature of a consumer-driven rapid parcel-delivery,” states Sahil Barua, co-founder and CEO of SSN Logistics Private Limited, which runs Delhivery. Thus, in a move to build a company that specialised in this space, he and his co-founders, Mohit Tandon, Suraj Saharan, Bhavesh Manglani, and Kapil Bharati, founded Delhivery in 2011.

 

The initial challenge for them was in clinching large e-commerce companies as clients. “Several other new e-commerce logistics companies had sprung up and disappeared, or had handled large volumes poorly. This didn’t work in our favour,” notes Barua.  Despite that, they stuck to their guns, and focussed on building the infrastructure, technology and network. Today, three years hence, the company serves over 35 offline retailers, 15,000 sellers and 600 e-commerce companies, and its service capabilities have expanded to include Omni-channel services, commerce services (such as store management), and fulfilment logistics.

Omni-channel helps retailers integrate channels like website, mobile and voice, to create a seamless experience, and helps manage store-fronts, market place integration, catalogues and analytics from a single location. Currently, Delhivery operates express logistics in 150 cities and processes over 50,000 orders a day, and its fulfilment services are provided in Delhi, Gurgaon, Mumbai and Bangalore.

Keeping pace with the growth expected in e-commerce and retail, by FY15, the founders are looking to build a network of at least 15 to 20 mega-fulfilment centres and express logistics services in over 200 cities. The company also plans to expand its suite of commerce services, and further build on its proprietary technology platform for supply chain.

“We are launching a full suite of seller services focused on store front technology, channel integration, social media selling, studio services and such. In addition, we are launching fulfilments and shipping products such as priority fulfilment or prime fulfilment, bulk shipping, returns collection and processing,” says Barua, who was a management consultant with Bain & Co. prior to taking the entrepreneurial plunge. In FY14, Delhivery recorded a turnover of Rs. 62 crore and now laying the roadmap to touch a topline of Rs. 800 crore by FY 2017.

Fund Raising

Initially, the founders bootstrapped the company with their own money. In 2012, Times Internet Limited (one of its customers), invested Rs. 6.6 crore in the business, and a year later, in August 2013, Nexus Venture Partners and existing investor, Times Internet Limited, invested Rs. 35 crore. “Both of them have helped us understand our customers better since they have run or invested in successful e-commerce platforms themselves,” notes Barua, and adds that the company is in the process of closing a Series C round, the details of which will be disclosed at a later stage.

In the same year (June 2013), Delhivery had acquired the cash collection services company, Gharpay Technology Services Pvt Ltd. “The Gharpay team was looking to move on to a new venture and was looking for a strategic exit for its business. At that stage, it was operating in 10 cities with 60 field staff. For us, the integration process was simple because, by then, we were present in over 40 cities with more than 1000 employees on board,” explains Barua. He goes on to clarify that the main goal behind this acquisition was to acquire some of the key accounts that the GharPay team had built. “The business is now fully profitable but accounts for only a small portion of our overall business. We currently process only 300 orders a day since we are quite selective about taking on clients,” he indicates.

The differentiating factor

Barua shares two aspects that make Delhivery different from other players like DotZot Express and ECom Express; firstly, it is a specialised player in the logistics industry and, unlike older players, it does not operate on a widely distributed franchise model, which often leads to difficulties in standardisation and control. “Our focus when building this was never to blindly create a ground network of delivery staff, but to invest heavily in technology, training and process engineering. This helped us scale faster and sustain growth over the last three years, where most new players have disappeared,” reasons Barua. He then clarifies that, in fact, Delhivery is not merely an express logistics company but an e-commerce fulfilment company.

Delhivery has built multiple revenue models to suit the requirements of each client. For instance, its fulfilment and express shipping services are provided to merchants on a per shipment basis, to ensure that merchants of all sizes work with it. Moreover, for now, it does not charge its clients for some of the technology services it provides, with the belief that these are critical enablers to the company’s operations.  “We keep our costs lower by driving operational efficiencies at every level. For example, we do it through more optimised stocking and inventory management at fulfilment centres, system-guided sorting at our hubs and system-directed routing and package dispatch at our distribution centres,” states Barua.

Being better equipped

In a service-oriented industry, employees are the brand representatives. In such circumstances, stringent hiring and training forms a crucial component in maintaining the quality of work. Agreeing with this, Barua notes that all field and operations staff undergo a weeklong orientation when they join. “We are in the process of building our India training hubs in Delhi, Mumbai and Bengaluru which will act as centralised training centres for junior and middle management to groom them for senior level roles. Our goal is to create a talent pool not just for ourselves but for the logistics industry as a whole,” says the founder. When it comes to marketing brand Delhivery, Barua leaves it to the service quality to do the talking.

Addressing the gaps 

“Even today, the industry is fairly unorganised and logistics is viewed as a low-talent industry. What people don’t see is that it’s poised for an incredible growth, and the problems are so many and so complex,” points out Barua. A second challenge he sees is on the regulatory front, especially with respect to inter-state transportation and taxation. Thirdly, he believes there is a systematic under-investment in technology by local service providers (LSPs) and sellers. “Today, we face situations where we are unable to work with certain clients or partner with certain LSPs because our technology outstrips the legacy systems that are still in use at their end,” reasons Barua.

The initial idea behind setting up Delhivery was to simplify logistics for the e-commerce world. “This sector was facing huge challenges around delivery timelines, cash management and returns management.  And, large courier operators operated on models designed for different industries. They did not have the expertise to understand the offline payments model, and the nature of a consumer-driven rapid parcel-delivery,” states Sahil Barua, co-founder and CEO of SSN Logistics Private Limited, which runs Delhivery. Thus, in a move to build a company that specialised in this space, he and his co-founders, Mohit Tandon, Suraj Saharan, Bhavesh Manglani, and Kapil Bharati, founded Delhivery in 2011.

The initial challenge for them was in clinching large e-commerce companies as clients. “Several other new e-commerce logistics companies had sprung up and disappeared, or had handled large volumes poorly. This didn’t work in our favour,” notes Barua.  Despite that, they stuck to their guns, and focussed on building the infrastructure, technology and network. Today, three years hence, the company serves over 35 offline retailers, 15,000 sellers and 600 e-commerce companies, and its service capabilities have expanded to include Omni-channel services, commerce services (such as store management), and fulfilment logistics.

Omni-channel helps retailers integrate channels like website, mobile and voice, to create a seamless experience, and helps manage store-fronts, market place integration, catalogues and analytics from a single location. Currently, Delhivery operates express logistics in 150 cities and processes over 50,000 orders a day, and its fulfilment services are provided in Delhi, Gurgaon, Mumbai and Bangalore.

Keeping pace with the growth expected in e-commerce and retail, by FY15, the founders are looking to build a network of at least 15 to 20 mega-fulfilment centres and express logistics services in over 200 cities. The company also plans to expand its suite of commerce services, and further build on its proprietary technology platform for supply chain.

“We are launching a full suite of seller services focused on store front technology, channel integration, social media selling, studio services and such. In addition, we are launching fulfilments and shipping products such as priority fulfilment or prime fulfilment, bulk shipping, returns collection and processing,” says Barua, who was a management consultant with Bain & Co. prior to taking the entrepreneurial plunge. In FY14, Delhivery recorded a turnover of Rs. 62 crore and now laying the roadmap to touch a topline of Rs. 800 crore by FY 2017.

Fund Raising

Initially, the founders bootstrapped the company with their own money. In 2012, Times Internet Limited (one of its customers), invested Rs. 6.6 crore in the business, and a year later, in August 2013, Nexus Venture Partners and existing investor, Times Internet Limited, invested Rs. 35 crore. “Both of them have helped us understand our customers better since they have run or invested in successful e-commerce platforms themselves,” notes Barua, and adds that the company is in the process of closing a Series C round, the details of which will be disclosed at a later stage.

In the same year (June 2013), Delhivery had acquired the cash collection services company, Gharpay Technology Services Pvt Ltd. “The Gharpay team was looking to move on to a new venture and was looking for a strategic exit for its business. At that stage, it was operating in 10 cities with 60 field staff. For us, the integration process was simple because, by then, we were present in over 40 cities with more than 1000 employees on board,” explains Barua. He goes on to clarify that the main goal behind this acquisition was to acquire some of the key accounts that the GharPay team had built. “The business is now fully profitable but accounts for only a small portion of our overall business. We currently process only 300 orders a day since we are quite selective about taking on clients,” he indicates.

The differentiating factor

Barua shares two aspects that make Delhivery different from other players like DotZot Express and ECom Express; firstly, it is a specialised player in the logistics industry and, unlike older players, it does not operate on a widely distributed franchise model, which often leads to difficulties in standardisation and control. “Our focus when building this was never to blindly create a ground network of delivery staff, but to invest heavily in technology, training and process engineering. This helped us scale faster and sustain growth over the last three years, where most new players have disappeared,” reasons Barua. He then clarifies that, in fact, Delhivery is not merely an express logistics company but an e-commerce fulfilment company.

Delhivery has built multiple revenue models to suit the requirements of each client. For instance, its fulfilment and express shipping services are provided to merchants on a per shipment basis, to ensure that merchants of all sizes work with it. Moreover, for now, it does not charge its clients for some of the technology services it provides, with the belief that these are critical enablers to the company’s operations.  “We keep our costs lower by driving operational efficiencies at every level. For example, we do it through more optimised stocking and inventory management at fulfilment centres, system-guided sorting at our hubs and system-directed routing and package dispatch at our distribution centres,” states Barua.

Being better equipped

In a service-oriented industry, employees are the brand representatives. In such circumstances, stringent hiring and training forms a crucial component in maintaining the quality of work. Agreeing with this, Barua notes that all field and operations staff undergo a weeklong orientation when they join. “We are in the process of building our India training hubs in Delhi, Mumbai and Bengaluru which will act as centralised training centres for junior and middle management to groom them for senior level roles. Our goal is to create a talent pool not just for ourselves but for the logistics industry as a whole,” says the founder. When it comes to marketing brand Delhivery, Barua leaves it to the service quality to do the talking.

Addressing the gaps 

“Even today, the industry is fairly unorganised and logistics is viewed as a low-talent industry. What people don’t see is that it’s poised for an incredible growth, and the problems are so many and so complex,” points out Barua. A second challenge he sees is on the regulatory front, especially with respect to inter-state transportation and taxation. Thirdly, he believes there is a systematic under-investment in technology by local service providers (LSPs) and sellers. “Today, we face situations where we are unable to work with certain clients or partner with certain LSPs because our technology outstrips the legacy systems that are still in use at their end,” reasons Barua.

Into the future

In the coming years, Barua and his team plan to take Delhivery to international markets such as China, Singapore and Sri Lanka. However, he is quick to add that the company will focus on commerce technology and fulfilment services in these markets, and not invest in building express logistics services. Moreover, in three and a half years, Delhivery plans to tap 1,000 offline and one-lakh small retailers, and, in five years, aspires to be the largest retail ecosystem enabler in India. “Think of us as an emerging eBay enterprise + FedEx of India,” quips Barua, on a parting note.

In the coming years, Barua and his team plan to take Delhivery to international markets such as China, Singapore and Sri Lanka. However, he is quick to add that the company will focus on commerce technology and fulfilment services in these markets, and not invest in building express logistics services. Moreover, in three and a half years, Delhivery plans to tap 1,000 offline and one-lakh small retailers, and, in five years, aspires to be the largest retail ecosystem enabler in India. “Think of us as an emerging eBay enterprise + FedEx of India,” quips Barua, on a parting note.


FROM PLACEMENT TO DELIVERY 

Step One: Delhivery’s fulfilment management system (Godam) routes the order to inventory at one of its four fulfilment centres 

Step Two: Inventory is picked up from storage location, quality inspected, packaged and readied for dispatch 

Step Three: A logistics partner is chosen by the Courier Management System (CoMS) and dispatch labels are applied by the Shipping and Labelling Service (ShipSmart) 

Step Four: If Delhivery Express is the selected partner, a pickup request is generated in the Transportation Management System (FALCON), which then schedules pick-up from the nearest processing centre. FALCON also charts out the entire path of the parcel including what modes of transportation is available and the expected date of delivery. 

Step Five: System guides flow of the parcel to the end distribution centre from where it is dispatched and delivered to the consignee. 

Step Six: After payment is received from the consignee (in the case of COD orders), it is auto-reconciled at end of day; cash is deposited in the bank on the same or next day and then remitted to the client by the day after.


Snapshot 

Delhivery

Year: 2011

City: Gurgaon

Investors: Times Internet Ltd. and Nexus Venture Partners

Revenue: Rs. 62 crore (in FY14) and targeting Rs. 800 crore (by FY17)

Solutions: Omni channel, commerce services and logistics and fulfilment services

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