Expect e-commerce to grow between 15-20% year-on-year: Delhivery CEO

Delhivery cofounder and CEO Sahil Barua said in a post-earnings call that he expects the online retail sector to grow by about 15-20%, amid a slowdown in demand. The ecommerce industry has been hit by a post-pandemic slowdown, rising inflation, and offline stores making a comeback.

ET reported on May 11 that growth in shopping across ecommerce platforms had been slower than anticipated, citing industry executives, multiple brands and third-party platforms tracking shipment and sales data.

“I don't want to become the Cassandra (one who predicts misfortune) of this industry,” Barua said. But I must mention when I said (there would be a slowdown) three quarters ago, it was generally met with widespread disbelief… My own estimation hasn’t changed. I expect ecommerce to continue to grow between 15% and 20% year-on-year," said Barua.

He added that the slowdown and turbulence would benefit Delhivery because of its cost efficiency.

"I do want to point out that a slowing market in which customers are focussed on profitability is an extreme advantage for Delhivery,” he said. “We are by far the most efficient player in the market and at a time when our customers are counting their costs they will shift more volume to Delhivery. And as I had mentioned, we do not face pricing pressures from our customers. Our express business continues to be profitable, so I view this as a positive and turbulence is always a good thing."

For the full year ended March 2023, Delhivery’s revenue from operations grew 5% year-on-year to Rs 7,225.3 crore. Its net loss, however, was little changed at Rs 1,007.8 crore, from Rs 1,011 crore in FY22. In October, the company said that the ecommerce industry is expected to see a slowdown in the coming months due to inflationary pressure.

Also read | Delhivery Q4 revenue falls 10%, loss widens to Rs 158 crore

Barua said that the re-entry of Chinese fashion giant Shein through Reliance Retail will benefit the entire ecommerce industry and likened it to a tide that lifts all boats.

“In terms of Shein, it is an interesting announcement,” said Barua during the company’s earnings call on Saturday. “They used to be a high-volume player the last time they were here. Ajio has been one of the fastest-growing ecommerce platforms in the last 12 months. And I think this bodes well for the market.”

Also read | Building India's Shein: why investors are backing a new wave of fashion ecommerce startups

Ecommerce dependence

During the earnings call, Barua underscored that he continues to be bullish about the long-term prospects of the ecommerce sector. ” As a category, we believe ecommerce will continue to grow. It sort of becomes a growth lever as it replaces offline in some categories…,” he said.

ET had reported in April, citing a report by brokerage firm Bernstein, that Delhivery saw its market share in ecommerce shipments slip to an estimated 21.5% in 2022-23 (April-March), from 23% in FY22, and this is expected to slide to 19% by FY30.

Further, the brokerage firm had also ascribed the fall in volume growth for Delhivery to the closure of online marketplace Shopee.

In its earnings presentation, Delhivery pointed out that its express parcel revenue in the January-March period stood at Rs 1,177 crore, 4% down from the same period last year. Of the Rs 1,232 crore recorded in express parcel revenue during the quarter ended March 2022, Rs 161 crore was from Shopee.

ET had reported on May 11 that shopping across ecommerce platforms was growing slower than anticipated. Data from Unicommerce, an ecommerce-focused warehouse solutions provider, showed 16% year-on-year volume growth in the March quarter. Third-quarter volumes climbed approximately 19%.