The Next Big Opportunity Lies In India’s Logistics Tech Startup

Five-year-old e-commerce logistics startup, Delhivery may close a $100 million or Rs 670 crore pre-IPO fund raise which has attracted the interest of private equity biggie Carlyle group, China's Fosun and Goldman Sachs Investment Partners, people familiar with the matter told TOI.

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The Gurgaon-based company, which facilitates the delivery of goods for online retailers like Flipkart and Amazon, is likely to snag a valuation of about $650 million, post the investment comes through.

Now, Delhivery, Flipkart's eKart, and Blue Dart together cater to 65% of e-commerce outsourced to last-mile logistics, while Amazon Logistics, commands about 12-14% share of the market, as per industry sources.

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Logistics Tech-startup Exploring Overseas Opportunites

As the demand for mobile platform is growing exponentially, logistics technology solutions, FarEye, has announced that it is going to expand its services in Europe to serve its customers directly and to establish a business foothold in the region. According to the company, its SaaS platform solves the critical problems faced by any logistics company i.e. real-time coordination with delivery persons, execution & customer requests.

Lessons From China

In China for instance, multi-billion dollar companies were born on the back of its e-commerce boom.

Alibaba’s “iron triangle” strategy for instance, is a combination of e-commerce, logistics and finance. In logistics, Alibaba owns a 48% stake in ‘China Smart Logistics,’ or ‘Cainiao.’ The rest of the company is owned by logistics players that are together called ‘Three Tongs, One Da’. They are Shentong, Yuantong, Zhongtong and Yunda, all from a town called Tonglu close to Alibaba’s headquarters Hangzhou, writes Clark. The scale at which it operates is mind blowing. Cainiao is not a typical logistics company. It is essentially a big data platform which links a network of logistics partners, warehouses and consumers. The company recently raised an undisclosed amount of funding at a $7.7 billion valuation.

Delhivery’s growth underscores the importance of last mile ecommerce delivery in the booming online retail market. “What we are doing with tech and data science is giving us a sustained competitive advantage,” says Sahil Barua, CEO and cofounder of Delhivery.

Boost From Government

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Logistics startups, like HipShip, and young logistics companies, like Delhivery, Blackbuck, Rivigo and Shadowfax, will be now allowed to use the railways for end-to-end solutions. The government is also going to help by adding Bharat Net, a scheme where optic fiber is going to be added along the railway track. This will allow startups to enable their clients to track their product from the source.

Conclusion

According to a Morgan Stanley Research released early this year, by 2020 India's ecommerce market will be pegged at $119 billion versus the earlier estimate of $102 billion, and the total Indian internet market size (including the online food-aggregation business) to be a $159 billion industry from $137 billion. This growth can be foreseen based on the technological advancements and infrastructure improvements made in the logistics space in India.

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