DELHIVERY: Business Model and Upcoming IPO

BUSINESS MODEL:

Startup Name Delhivery

Headquarter Gurgaon, India

Sector Logistics

Founders Kapil Bharati, Mohit Tandon, Sahil Barua, Suraj Saharan, Bhavesh
Manglani

Founded May 2011

Parent Delhivery Pvt Ltd

Organization

Total Funding $1.3B

Revenue $464.03 mn (INR 3500 crore in FY2021)

Valuation ~ $3 billion

In 2011, when it started Delhivery was just a food delivery company, at this point Zomato was a
hostel listing website. At that point it was doing good for a start-up, delivering food in just
30minutes and approx. 100 deliveries per day.

But the R & D team realized the scope of Logistics was way beyond food delivery. At that point
Ecommerce companies were using either their own logistic services which were very limited or
using existing logistic services which were expensive and inefficient in transportation. Infact,
cases of getting wrong deliveries were high and the refund process was so hectic.
The existing system did not consider differences in ecommerce delivery and traditional delivery
such as warehouse, supply chain, payment collection, refunds etc.
Due to these inefficiencies, Delhivery decided to enter the business to provide logistic services
to e-commerce.
Although they were rejected by many e-commerce companies for more than one year, which
motivated them to provide better services. They started by identifying three major problems:
1. Time taken to Deliver products was extremely long
2. No technology to track the package
3. Cash cycle was long (30 days)
Delhivery solved these problems by:
1. They reduced delivery time to 3 to 1 days
 2. Provided better visibility by creating live tracking facility, and
3. Cash cycle was reduced to 2 days.
They were able to do this because they didn’t spend the funding money in scaling their business
all across the country, instead they understood the main working of how a logistic company
works and developed themselves and made fundamental changes in core business of the
company and work differently from traditional logistic companies. Such as:
1. It follows a distribution model (point to point) for delivering packages instead of Hub and
Spoke, resulting in reducing delivery time.
2. Operation of Delhivery was tech driven which was not popular in back 2011, it invested a
lot in creating this tech system which catered the need of indian ecommerce system.
3. Maintained relatively asset light Model, that is it only owns Gateways, fulfillment center
and Line Halls, while remaining parts such as transport vehicles etc were leased from
contractors and network partners.
Since, Delhivery was able to come up with a business model which aligned with ecommerce in
India, when e-commerce exploded in India so did Delhivery company.
It did around 200,000 Deliveries in 2012 and recently in 2021, they did 28 crores deliveries.
They blew past legacy businesses like blue dart, which started in 1984.

In the future, as much e-commerce will bloom, so will Delhivery’s growth because it has created
competitive advantages for itself.

Upcoming IPO:
Even though Delhivery is the largest third party logistic service provider in India, It is still
a loss making company.
It is coming up with an IPO of $1billion which is valued around $3billion.
They will be spending the IPO money either by sending current investors out of the
company or investing it back in the company and try to reduce its dependency on top 5
customers such as amazon, flipkart etc from whom they get a large part of business and
diversify its customer to smaller D2C brands.
It would be soon to say it will be a good IPO for retail investors as for now it just got
approval for an IPO from SEBI.