Niharika Neureker – Dutch Uncles

Delhivery’s Delivery on Success, Becoming a World-Class Logistics Company

Niharika Neureker — Sat, 12 Jun 2021 02:35:04 +0000

Giving in to our hunger pangs by ordering food at ungodly hours is something that most of us have done, but ever heard of a business idea being birthed by this simple act of ‘pick and drop’, that is now dominating India’s logistics sector? The inspiring story is about Gurugram-based Delhivery, which started its journey as a hyperlocal food-delivery start-up in 2011 and became the new-age logistics major.

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Delhivery was the first one to perceive an opportunity in a restaurant delivery network and that’s how they ventured into the hyperlocal market in the first place.

A Midnight Conversation…

It was a midnight conversation with a delivery guy that struck a business proposition in the heads of co-founders Sahil Barua and Suraj Saharan. The duo had ordered food from a nearby restaurant in Gurugram at about half-past midnight. Soon they found themselves indulged in a conversation with the delivery guy standing at their front door. Upon learning that the restaurant was on the verge of shutting down permanently, the two set off to meet its owner, Balaji, who explained his dilemma of letting his staff down with this decision.

Barua and Saharan took it upon themselves to recruit all of the restaurants’ employees, which led to the inception of Delhivery. However, what the duo did not know then was that Balaji, who also ran a cargo business, was destined to indulge in a business with them in a few years time.

The company started off by attempting to provide a solution to restaurants and their problems in delivering food within a limited period. They understood the growing needs and limitations in the restaurant distribution network and got off in a hyperlocal environment with only 5 employees handling everything from accounts to product service to delivery hookups.

Even to their own surprise, the founders managed to carry out and complete delivery within 30 minutes.

Delhivery was the first one to perceive an opportunity in a restaurant delivery network and that’s how they ventured into the hyperlocal market in the first place. The duo was later joined by co-founders Mohit Tandon, Bhavesh Manglani (COO) and Kapil Bharati (CTO), as the start-up gained momentum.

They opened its first branch at Sushant Arcade in Gurugram, a 250-square-foot space that served as their corporate office, dispatch centre, call centre, and development centre – all in one.

It was when the start-up’s business started booming, with processing of over 100 local orders per day, is when one of their investors – Abhishek Goyal – got them started in the e-commerce market. The start-up had caught the eye of Goyal, co-founder of Tracxn, along with Prasant Tandon, ex-founder of HealthKart, who showed great interest in Delhivery and their ability to deliver packages under thirty minutes.

An entrepreneur always searches for change, responds to it, and exploits it as an opportunity. The start-up founders did the same. Spotting an opportunity to create an integrated, technology-driven solution in the e-commerce segment, they decided to move from local food delivery to e-commerce fulfilment.

A year down the line since Delhivery’s inception when the founders decided to venture into the e-commerce market, they realised that they needed cargo services and approached Balaji, who to this day continues to be one of their largest and most important vendors.

Taking the E-route

It was one of their early investors, Times Internet, who played an instrumental role in getting the start-up into the e-commerce market. They reasoned that if they could handle food delivery, why not expand into the e-commerce business and deliver parcels and packages as well? In short, monetise the existing resources and add new revenue streams.

By the end of December 2011, the start-up began to deliver over 500 packages each day in the Delhi NCR region for five e-commerce clients. Their team had grown to 25, and they had opened their second and third locations in Malviya Nagar and Janakpuri, respectively, to serve the entire Delhi-NCR region.

Despite being late in the segment, the founders saw the start-up’s requirement in logistics. During that time, e-commerce companies either had their own delivery arms or used courier companies (bulk cargo). However, neither of them focussed on rapid delivery. Delhivery cashed in on this problem to penetrate the internet space and therefore emerged as a third-party, last-mile logistics delivery firm to serve the e-commerce companies.

Hence the addition was made and eventually the transformation. Delhivery understood the massive scope of e-commerce delivery against traditional delivery right in time.

The B2B Approach

Delhivery follows a unique B2B business model. The platform offers services under three departments – warehousing, transportation and commerce – with the majority of operations specialising in transportation. The primary focus is on the delivery and distribution model, in which each organisation’s branch is run as a hub. This enables the parcels to be shipped to the customers in a hassle-free manner.

When a product is purchased online, it is obtained from the retailer and sent to a receiving facility, where it is stored to be sent to the destination. This is also known as a first-mile operation. Following that, a line haul is used to convey the goods from the manufacturing site to their desired location. The product is then shipped from the distribution system to the consumer’s home in what is known as the last mile process.

Delhivery aids in last-minute delivery and distribution, third-party and transit warehousing, reverse storage and logistical requirements, payment aggregation, vendor-to-warehouse and vendor-to-customer shipment, and much more.

Their proprietary network architecture, infrastructure, alliances, engineering, and technological skills are transforming and redefining India’s logistics industry today. The founders claim that the order cycle that previously used to take up to four to seven business days has come down to as low as 24 hours.

Furthermore, Delhivery’s business concept has a competitive advantage over its rivals. Unlike other players such as Rivigo and Blackbuck, who are primarily concerned with a relay-based transportation system for high-end commercial demands, the start-up employs delivery boys to provide services to small businesses and individuals. The fact that Delhivery caters to local requirements as well as those of giant organisations while remaining a unicorn is what distinguishes it from others.

Creating Dominance

For FY 2020, Delhivery claims to have a turnover of Rs 2800 crore; with further ambitious plans to grow to Rs 6000-7000 crore in the next two years.

The start-up has raised a total of $934.5 Million in funding over 9 rounds since inception. Its first round of Series A funding of $1.5 million came in April 2012 from Times Internet Limited, which bought a minority stake in the venture in June 2019. This marked the beginning of Delhivery’s success.

The start-up later got its ticket to the prestigious Unicorn Club following a Series F funding of $413 Million led by SoftBank, Fosun International, and Carlyle Group in 2019. This was coupled with an investment of $265 Million from the Canada Pension Plan Investment Board (CPPIB) in two rounds. The platform’s growth and progress is accelerated as a result of this and in the coming years, it hopes to raise Rs 220 crore.

The company faced initial losses owing to the sheer scale of creating a logistic infrastructure and the basic framework (Fixed cost). However, the long term vision was positive, as for any infrastructure-based company.

The investors placed their bets on Delhivery as they believed that the demand and volumes produced by the supply chain would eventually pay off and when that happened, Delhivery would make a comfortable amount of profit. With Delhivery emerging as a unicorn, the investors’ hopes and beliefs were eventually met.

Since the financial year 2015, Delhivery claims to have grown at a pace of 65% every year, with the firm delivering 25% of all e-commerce orders. This unicorn in the foreseeable future is expected to grow to 20,000 pin codes and also start investing in growing its supply chain network to small and medium-sized enterprises using its new funding.

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Delhivery follows a unique B2B business model. The platform offers services under three departments - warehousing, transportation and commerce - with the majority of operations specialising in transportation.

Key to always being Ahead: Facing Competition

With the introduction of GST, the country’s logistics sector, which is currently worth about $160 billion, is expected to grow to $215 billion in the next two years. As a logistics-based business, Delhivery is bound to face more competition in the industry than it already has been.

Over the years, its notable competitors include Ecom Express, DotZot, FSC (Future Supply Chain), BlackBuck, Delex, Delivery.com. The customers have a variety of options because of market competition, many of which deliver almost equal quality.

However, Delhivery in the process of selling its services emerged as a business that is marked by a very distinct and unique service because it was one of the first of its kind to realise the importance of e-commerce.

Delhivery as a start-up faces competition from two different segments. One is the simple logistics industry where it faces competition from big players like Rivigo (Unicorn) and Blackbuck (Soonicorn) and the other is a specific e-commerce logistics industry where it challenges start-ups like Ecom Express, Xpressbees, etc. Delhivery has the advantage of having a strong funding pool, which is used in strengthening the infrastructure at the early stage itself. Hence, it’s an already established strong and vast framework to work upon in comparison to other start-ups.

In 2020, Delhivery collaborated with Volvo to add tractor-trailers to the express network and will continue to invest in the same with a corpus of around Rs 300 crore to increase its fleet capacity.

According to Barua, this merger is the first huge deployment of tractor-trailers in express trucking. It is believed to be a significant move for Delhivery in terms of gearing up for the future, extending its network base, and strengthening the firms’ dominant position in the industry.

According to reports, Delhivery presently delivers 1.5 million orders a day in over 17,500 pin codes across 2,300 towns and cities in India. Its network of almost 7,000 drivers and over 5,000 trucks play an instrumental role in its achievements. Besides, the firm is also constructing some of the country’s largest trucking terminals in Delhi, Mumbai, Bangalore, Hyderabad, Kolkata and Chennai.

Dodging the Lockdown Bullet

With the onset of the pandemic, the logistics sector in the country was met with both challenges as well as opportunities, particularly for start-ups. Everyday necessities such as e-grocery, food distribution, and e-commerce sites emerged as the biggest gainers out of sheer necessity besides indulgence.

The ability of businesses to be able to provide these services gave them a positive picture in the eyes of their clients and helped them find a position in the market.

In order to meet the increased demand for more structured companies in the sector following the pandemic, Delhivery is now looking to invest Rs 300 crore in 18-24 months on extension, which includes growing fleet size and building trucking hubs.

IPO Dreams, Going Back to Food and more…

The logistic start-up has recently raised $277 Million as a part of its final funding round, prior to its IPO launch later this year. The new round valued the 10-year-old startup at about $3 billion.

Furthermore, Delhivery has re-entered the food delivery market, collaborating with cloud kitchen businesses and taking direct restaurant deliveries. It is also looking for acquisitions in the B2B area. This time, the business has chosen to collaborate with food businesses and restaurants that have been seeking alternatives to Swiggy and Zomato due to their alleged hefty commissions.

What started as a simple hyperlocal express delivery service for boutiques and restaurants in Gurugram has grown into one of the leading e-commerce logistics platforms. With the current need for more efficient and well-organised logistics players on the rise, the platform holds tremendous promise for future development and expansion, whose only aim is to keep their clients happy and satisfied and resolve any problem that arises relating to the product or service.

The post Delhivery’s Delivery on Success, Becoming a World-Class Logistics Company appeared first on Dutch Uncles.

Rapido: Cashing in on India’s Shared Mobility Space

Niharika Neureker — Wed, 19 May 2021 10:35:05 +0000

Do you also envy those two-wheelers who drive right past you, paving their way through the hustle and bustle of everyday markets, hour-long processions and unavoidable traffic jams, while you are stuck in your luxurious four-wheeler not being able to move even an inch? Well, that’s where Rapido comes in and that too at the touch of a finger. What initially started as a mere IIT alumni project, is now a full-fledged “ride solo” sloganed, online, two-wheeler taxi service aggregator and provider, based out of Bangalore, India.

Founded in the year 2015, the white, black and yellow coloured Rapido now operates in over 100 cities across the country.

Brains That Birthed the Idea

Aravind Sanka, Pavan Guntupalli, and SR Rishikesh initially founded ‘the Karrier’ in 2015 as an IIT alumni project. While Sanka, an alumnus of IIT Bhubaneswar, previously worked as the Finance Business Partner for Flipkart.com, Guntupalli pursued his degree from IIT Kharagpur. A former software developer with Samsung Research India. Rishikesh, on the other hand, pursued his education at PES University. The founder of IMP Stant and the Karrier has also received the “Best Project of the Year” award for his innovative ideas and their polished execution.

The three founders’ simple idea behind the startup was to recruit people who owned two-wheelers in particular. They wanted to create something different and unique in comparison to the already existing idea of an online taxi service provider, such as that of Ola and Uber, who heavily invest in four-wheelers. The trio believed that those who owned two-wheelers would only be required to register on the ‘Rapido-Captain App’ and verify their information with the company, thereby making the entire process easy and hassle-free.

The founders identified a problem and in that, a business opportunity. Traffic in major cities of the country is an issue that one cannot simply overlook; and Ola and Uber would therefore never be easily and readily available to the general commuters, especially on a regular basis. They then devised a strategy to solve such issues and built on a blueprint that would provide for convenient, memorable and economical two-wheeler rides.

Rapido and the Mechanism behind the Name

The Rapido app allows its users to book a trip and a rider, also called the “Captain”, who will then arrive at the specified venue. The fare includes a base fare of Rs. 15 as well as an extra charge of Rs. 3 per kilometre travelled. The “Captains” are compulsorily required to register through the ‘Rapido-Captain App’ and upload the necessary documentation which the company will then validate. All kinds of two-wheelers, including motorcycles, scooters and e-bikes are permitted, provided the vehicle is not older than 2010.

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Rapido has had over 15,000 registered users since its launch, with an estimated 30,000 journeys every day. Not only has the startup created over 500,000 jobs in India, but it also claims to have over one crore registered users as of November 2019.

The Success Milestones

Rapido, ever since its inception, has over 15,000 registered users, with an estimate of 30,000 rides in a day. Additionally, Hero MotoCorp Chairman Pawan Munjal and former Google India Head Rajan Anandan are among those who have stakes in the company.

According to Aravind Sanka, 60 per cent of working people switch between three modes of transportation on a regular basis while commuting. The founders, therefore, needed something that is dependable, convenient and inexpensive for ordinary people to drive short distances. This led to a tagline that resonates with a daily commuter – ‘ride solo’.

The firm has generated more than 500,000 jobs in India, has about 15 lakh ride partners and one crore registered users as of November 2019.

The team realised it needed to create a unique product that centred on asset efficiency, utilisation, operations and transportation, with a particular emphasis on Tier II and III cities. This was the main priority when building and developing a robust product.

How in the Time of Covid-19, Rapido Won Our Hearts

Post the outbreak of the Covid-19 pandemic, Rapido further extended its logistics activities. It initiated the delivery of hyperlocal shipping for local enterprises and e-commerce firms. Rapido also began offering on-demand auto-rickshaw services in 14 cities in October 2020.

When Prime Minister Narendra Modi pronounced a pan-India 21-day lockdown in the wake of the coronavirus pandemic, the start-up confirmed it had temporarily halted operations. However, later the company decided to join hands with Bigbasket, Big Bazaar and Spencer’s Retail to assist in supplying necessities in such unprecedented times.

Around 70 per cent of Rapido’s rider partners were on the field helping with the essential supplies. To protect its rider partners from the deadly coronavirus, the start-up had undertaken all the necessary steps and precautions. Additionally, Rapido provides a Rs 10 lakh community protection policy to its riders to protect them from financial hardship in the event of hospitalisation due to COVID-19.

Rapido is currently in talks with a number of players, including Grofers, Dunzo, FreshtoHome, and others, about expanding their assistance to help them deliver critical orders. In these uncertain and undetermined times, the startup has left no stone unturned to provide assistance to those in dire need to help. Rapido even announced that it would not charge its rider partners any commissions for trips taken to transport important goods.

Moreover, to ensure more protection in the middle of the pandemic, the team recently launched Rapido Safety Shield, a first-of-its-kind safety measure by a bike taxi player in India.

The Rapido Safety Shield is a lightweight PVC board that is fixed to the Captain’s back like a backpack and weighs about 400 gms. The Captain’s body is shielded by the shield, which creates a barrier between the passenger and the Captain. The team believed that this, in addition to other protective initiatives such as gloves, sanitisers and the Aarogya Setu App would improve safety.

How Rapido Thrives in a Market Brimming with Cut-Throat Competition

Over the years, Rapido has been successful in attracting new competition in the market; namely, RideAmigos, GoKid, Vollo and GrabTaxi. While RideAmigos’ top priority being transportation, the company also manages mobility, offers simultaneous services pertaining to travel planning, ride monitoring and subsequent gamification; as a carpooling app for kids, GoKid organizes kid’s carpools and aims to reduce noise and pollution. Vollo, on the other hand, is a comparatively new startup that allows users to browse for buses, fly quickly and easily, and also book tickets.
The three Rapido founders, Aravind Sanke, Rishikesh SR, and Pavan Guntupal, bet heavily on the mobility domain, and the startup was able to thrive and expand despite the regulatory competitive wrangling in the market.

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Rapido has seen a host of challenges in terms of the legality of its activities in various cities due to regulatory restrictions, but has since overcome them due to savvy business models and clever pivoting.

The Secret Behind the Success

From the onset, the startup made it a point to cater to the concerns of customers and ‘Captains’ in order to improve facilities.

They realised that consumers were willing to wait for a lift, and therefore they added a snooze button to the system. If a customer is unable to locate a bus, pressing this button causes the app to search for a Captain in the area for 10 minutes.

In the second year, the team found that many users who used the service on a daily basis were used to a pass scheme. As a result, the Rapido Pass was launched. The passengers who opt for an ‘x’ number of journeys per month are offered each ride at a reduced rate.

Rapido makes it a point that they would continue adding features to the app guided by the evolving and never-ending demands of consumers. The company has a history of prioritising customer satisfaction by building on their needs and this has been a major secret behind the startup’s success.

Setbacks on the Way

Rapido has encountered a few setbacks in terms of the legalities of its operations in a number of cities. Several Rapido bikes were confiscated in Coimbatore in October 2018. Rapido’s activities were suspended throughout Tamil Nadu by the Madras High Court in July 2019 and the Rapido iOS app was also deleted from the App Store for violating local rules.

The court however lifted the ban in August 2019, allowing the company to restart operations in the state before new rules for bike taxi services were drafted by the state government. According to sources, the provisional orders were withdrawn after Rapido clarified the process for booking bikes via the app to the judges and confirmed that they were following all the required safety precautions, such as requiring cyclists to wear helmets and have valid insurance. The court further inquired as to when the Tamil Nadu government would file appropriate legislation for bike-sharing systems, similar to those enacted in other states such as Telangana, Rajasthan, and Chandigarh.

What’s Next for Rapido?

The start-up business is quickly expanding. The company’s financials reflect its expansion in the near future. In the previous year, the Bengaluru-based corporation announced a 12.5X increase in sales. Interest income and capital gains from mutual fund sales were also received by the firm. Although its aim is to reach a million customers every day, it is important to note that 5,00,000 captains have already served 10 million customers in 90 locations.

Rapido had received an initial and fresh funding round of Rs. 390 crores led by Westbridge Capital, Nexus Venture, among such others; and this played an instrumental role in making the company what it is today. However, this is just the beginning. The company hopes to expand its offerings to over a hundred cities and reach a daily trip volume of one million. The company’s objective is to add more new features to the app, making it more effective and user-friendly. The founders are considering lowering the fees by offering a model that would be subscription-based and provide a power pass to their existing customers.

As the company continues to maintain its leading role in the bike taxi industry across cities, their aim is to not only reduce the cost of the rides but also instill brand loyalty in the customers by providing a reliable, convenient and memorable riding experience.

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