The Gurugram-based firm is also looking to expand its quick-commerce business to major metropolitan cities in a few months, said Milind Sharma, Delhivery’s newly appointed head of rapid commerce and direct-to-consumer brands.
“While there are investments needed to build this business, we are keeping tight control on our costs. Our initial set of dark stores (small warehouses) launched in Bengaluru in January are already at 70% break-even level. The internal target is for many of them to hit break-even in the coming quarter,” Sharma said.
Delhivery rolled out Rapid Commerce, a sub-two-hour delivery service, in January to cater to direct-to-consumer brands and e-commerce platforms, underscoring the growing demand for ultra-fast deliveries in India.
As part of this, the company is setting up a network of dark stores in metro cities to enable such brands and platforms to deliver orders within a few hours or the next day.
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Delhivery is also looking to cut the 7-9 months typically needed for a dark store in metro cities to turn profitable.
“There is scope for each store to break even in 4-6 months. To achieve this, we are ensuring productivity is high by closely monitoring store-level profitability. We are also using our proprietary technology for various functions such as last-mile routing,” said Sharma.
Sharma, who was on Monday appointed to head Delhivery’s Rapid Commerce business, has over 14 years of experience in e-commerce and was a co-founder of logistics firm NuvoEx, which Delhivery’s rival Shadowfax acquired in 2017. He had also co-founded PepperTap, an on-demand grocery delivery service that shut its operations a few years ago.
The quick-commerce rush
As competition in quick-commerce heats up, logistics companies are increasing investments towards expanding dark stores and hiring more personnel to keep delivery timelines short.
In February, logistics provider DTDC launched a 2-4 hour express delivery service, with its first dark store in Bengaluru. In May last year, logistics aggregator Shiprocket introduced ‘Quick’ to assist small- and medium-sized businesses in joining the quick-commerce rush.
“Third-party logistics companies are finally seeing growing opportunities in quick-commerce,” said an e-commerce executive with two decades of experience in logistics and last-mile delivery, declining to be identified.
“As e-commerce feels the heat of quick commerce platforms like Zepto, Blinkit and Swiggy Instamart, they have to put in the capital to keep up with shorter delivery timelines. This is likely to weigh down their bottomlines in the short term but will see strong prospects in the long run,” the executive added.
Delhivery is charting plans to expand its rapid commerce service—currently operational in Bengaluru, Hyderabad, and Chennai—to Jaipur, Chandigarh, and Ahmedabad. However, its strategy in these cities may differ, said Sharma.
“As a last-mile logistics provider, we want to be where the consumers are. Everyone wants their orders super fast these days. If consumer preferences change, we will find a way to cater to them. It’s as simple as that,” Sharma told Mint.
The firm will set up fewer stores in small cities by prioritizing high order volume regions to keep costs and productivity wastage to a minimum. “In cities like Ahmedabad and Jaipur we will begin with 2-3 stores. The benefit of doing this is that you can cover the entire city with just a couple of dark stores,” Sharma said.
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Delhivery’s profit after tax zoomed 114% year-on-year to ₹25 crore in the December quarter—its third consecutive profitable quarter. Revenue from operations grew 8% to ₹2,378 crore. The company’s express parcel revenue grew 3% on-year to ₹1,488 crore, while its part truckload revenue grew 22% to ₹462 crore.
Last month, Delhivery appointed Vani Venkatesh, former global chief executive of Bharti Airtel Ltd, as its chief business officer. Venkatesh has over two decades of experience across industries, having served in leadership roles at Airtel, McKinsey, Unilever, and Abbott Nutrition.
Delhivery also recently appointed Namita Thapar, executive director at Emcure Pharmaceuticals Ltd, and Sameer Mehta, co-founder and CEO of boAt Lifestyle, as non-executive independent directors on its board.
The Delhivery stock has lost nearly 26% on NSE this year. On Tuesday, the shares ended the day’s trading down 0.70% at ₹258.00 each, while the benchmark Nifty 50 closed nearly unchanged.