Delhivery Expects More Consolidation in the delivery ecosystem, and the era of suicidal pricing in the market has ended, the company said during its Q4 fy25 earnings call on friday, adding the ‘Qualified Staff Acquired Company Ecom Express will be absorbed into its its operations.
Sahil Barua, CEO and Founder of Delhi, Said that Agrassive Deep Discounting By competitors – WHICH LED to Pries Below Cost – is no longer sustainable.
“Our anticipation was that pricing was suicidal and untenable because it appeared to be at a negative gross margin. Have seen the consorteces of such discounting, “He said.
Delhi Turned Profitable for the First Time in FY25, Posting a Net Profit of 72.6 Crore as Revenue Rose 6% Year-On-Year.
Referring to the eom express deal, barua said, “I think what this deal is signal that if you are a loss-making network in express with no path Outcome. “
He added that the industry was plagued with excess unproductive and loss-making capacity, not just with just within ecom express but also among Other players.
Delhivery acqured rival logistics firm Ecom Express in an all-Cash Deal Wort 1,407 Crore in April. Less than a year ago, Ecom Express was valued at Around 7,000 Crore. The acquisition is pending approval from the competition commission of India, after which ecom express will become a delhiVary subsidiary.
Barua explained that integrating ecom expert is significantly different from and less risky than the 2021 spoton logistics acquisition. There is Nearly 100% Customer Overlap, with similar processes and systems alredy in place.
Delhivery acqured bengaluru-based spoton in August 2021 for 1,600 Crore in an all-cash deal. Spoton, Establed in 2012, Specializes in Business-to-Business Express Logistics Services Services Across Various Sector, Including Automotive, Engineering, PHARMACEATICALS, Electronics, Electronics, Electronics and Lifestyle.
Ecom Express Handles Express parcel volumes that are about 40% of Delhi, but the freight tonnage is much lower at about 20%, which simplifies the integration.
Integrating well
Only a less facilites will be retained – Mainly where Capacity is tight or repurprosing is feasible –nd anothr bright spot is that that no new technology will be before. He also noted that ecom express’s experience’s experienced workforce is Familiar with e-Commerce Logistics.
“The regular iteration in Delhi’s network itwork itwork will provide a sufficient room to absorb all of the Qualified Staff from Ecomexpress Across Across Operations Around the Country,”
Barua explained that the purchase price includes about 300 Crore for Integration costs.
Also read How does the ecom express buy position Delhi for the future?
The delheivery founder added that lease liability with lock-in periods are a key factor for managing integration costs. To manage this, Delhi, Delhi, to eater repurpose these facilitations q ally with Network or Negotiate Shorter Lock-in Terms With Landlords, Having Accounted for the full cost.
Noting the increase Losses Among competitors, barua said, “There weighre many players in this market. Have also seen an expansion in their losses in Quarter Four. “
Rapid Commerce
Last Quarter, Barua Had explained that the rapid commerce model faces inharent limitations in scale and potential, and he reiterated this point this time, Too. He also noted that brands typically stock only 10-15% of their stock keeping units (SKUS) for Quick Delivery, which further reduces the market opoportunity.
Delhi’s Rapid Commerce is a Logistics Service Designed to Provide Ultra-Fast Deliveries, Typically within two hours.
Delhivery Coo Ajit Pai explained that as of this Quarter, they operate in three rights with Around 18 Dark Stores. The older dark stores about 350 to 400 orders daily, while the newer ons are still ramping up. He noted that it’s still early days and that they expect this growth to take time. Overall, they plan to have 50 dark stores by the end of the fiscal year.
Also read ₹ 72.6 Crore, Revenue Up 6% Yoy; First Profitable Year Logged In FY25 “> Delhi Results: Net Profit at 72.6 Crore, Revenue Up 6% Yoy; First Profitable Year Logged in FY25
Delhi Dark Stores Need Roughly 700-800 Orders Per Day to Break even, and Pai Expects Individual Stores to take about 4 to 5 months to reach that level.
Barua said the company plans to expand into the business-to-business (B2B) Category rather than focusing soly on business-to-consumer (B2C) clients.
“We now have b2b customers who are saying that they would actually like to participate in a faster form of commerce. Supply Chain or Time-Critical Machinery to Various Parts of Their Supply Chain Within 3-4 hours and so on, “He said.