Logistics supply chain major Delhivery is evaluating an entry into hyper local delivery (aka on-demand logistics) space, according to two sources aware of the internal discussions. This would be potentially the second experiment by the Gurugram-based firm in the on-demand logistics segment.
“Delhivery is considering a play in the segment as the market has grown multifold in the past two-three years with the proliferation of on-demand services,” said one of the sources requesting anonymity. “It’s already conducting a pilot with a quick commerce firm where it’s taking care of packaging and delivery.”
Delhivery first experimented with the hyperlocal delivery business by leading a $7 million Series A round in Opinio in 2015. The bet did not work out as Opinio shut shop in October 2016.
“The market [food delivery + quick commerce] has grown many times in the past few years. Quick commerce companies including BlinkIt, Swiggy Instamart and Zepto alone do over 1.2 million transactions a day,” said the second source who also wished not to be named.
Volume wise, it makes sense for Delhivery as the company could partner companies across food and quick delivery segments. “Adoption of ONDC is another encouraging factor for the company to look at this segment,” said the person quoted above.
Queries sent to Delhivery on Sunday didn’t elicit any response. We will update the story if they respond.
If the company gets into on-demand logistics, it will compete with Flipkart-backed Shadowfax, Rapido, and a few others. Swiggy led a $180 million round in Rapido and the latter does fulfillment for it whereas Shadowfax works with both Swiggy and Zomato and quick commerce firms.
Delhivery’s FY23 as well last quarter results indicate that it requires new businesslines for driving growth. During FY23, its operating scale grew 5% while its last quarter growth barely recorded 1.9% growth QoQ.
Delhivery may be considering on-demand logistics as another option for growth, but the market has remained difficult as it can be despite an explosion in volumes.
As Google and Reliance-backed Dunzo would confirm, funds are not the secret sauce here, as one firm after another has struggled to make a profit.
In the case of Delhivery, the move may have been driven by the intensifying competition in its core business, where many players remain to contend with. However, it might make sense for the firm to wait it out for consolidation or a level of ‘coop-etition’ that seems likely as firms try to manage volatile markets.
Update: We have updated the story to reflect the actual representation of source information in the second para.
