E-commerce logistics players like Delhivery and Ecom Express witnessed a revenue growth of approximately 40 percent on an average during FY17 primarily driven by B2C e-commerce shipments even as the online retail sector grew at around 30-35 percent, signaling a shift in market share in the overall logistics space. Some of the companies have also been able to shrink their losses owing to scale and asset-utilization.
Delhivery posted an approximately 44 percent increase in total revenues to Rs 751 crore during FY17 from previous year’s Rs 523 crore, as per its regulatory filings with the Ministry of Corporate Affairs (MCA). The Tiger Global-backed company’s losses dropped by 21 percent from Rs 317 crore during FY 16 to Rs 249 crore in FY17 even as total expenses shot up to Rs 1,000 crore in FY17 from Rs 840 crore from the previous year, as per the company’s statement of profit and loss.
Ecom Express posted a similar growth in revenue which rose 37 percent in FY17 to Rs 493 crore from Rs 359 crore the year before. The company also diminished its losses by 24 percent to Rs 72 crore from Rs 96 crore, as per MCA filings sourced from data-tracking platform Tofler. XpressBees, a relatively smaller player which was spun off e-commerce company FirstCry, posted a stupendous growth with 122 percent increase in revenue from Rs 83 crore in FY16 to Rs 185 crore in FY17. CEO Amitava Saha said, the reason for this growth has been them increasing their pin codes from 2,000 to 3,500 in FY17 which led to this high growth in revenue.
Experts in the logistics space attribute the growth of these three companies to a variety of reasons.
“I think Delhivery’s revenues grew because they piloted their B2B business during FY17. On the other hand, Ecom Express saw a hike in revenues because of gaining more market share in the tier-III and IV markets,” said an investor who tracks the logistics space, requesting anonymity. “XpressBees’ growth can be credited to Paytm’s growth during that time.”
On the other hand, courier service company Gati’s ecommerce arm is experiencing a slowdown in growth, a shift from a situation where the company’s growth was primarily led by their ecommerce during Q1 of FY16 forming 11 percent of the company’s overall revenues, as per the company’s earnings call transcript.
While e-commerce growth is slowly picking up pace again and is expected to grow at around 40 percent, experts say that the next wave of growth and path to profitability for these companies would come from diversifying offerings apart from only B2C shipments. ET had reported in January that several e-commerce logistics players are foraying into B2B and cross-border logistics.
“Every year our non-e-commerce business becomes a larger part of the business. We also have a fulfillment business which is growing very fast,” said Sandeep Barasia, MD at Delhivery, which currently is dabbling in fulfillment , B2B and overseas logistics alongside B2C. – Gadgets Now