Delhivery sees next big buck from smaller towns as merchants take to ecommerce frenzy

Gurgaon-based logistics firm Delhivery has stepped up its outreach to small and medium businesses (SMBs) in smaller towns, sensing a growing opportunity as local businesses seek to tap customers beyond their towns and states.

“There has been an increasing penetration of consumption as well as supply, with brands emerging from both tier 2 and 3 cities,” Mohammed Ali, head of SME business at Delhivery, told ET. “More people want to explore direct brand platforms instead of relying solely on horizontal marketplaces.”

Delhivery, majority owned by FIIs, uses proprietary tech solutions to drive its logistic operations.


More than a third of its SMB business comes from smaller cities. Vadodara, Raipur and Thiruvananthapuram have seen a 40% jump in ecommerce orders in calendar 2024 in the direct to consumer (D2C) market, Ali said. Groceries (39%), fashion (27%) and beauty and care (13%) have seen steady growth, he said, citing shipment data.

Cities that were once content selling raw materials are now shifting to add value to realise better margins. “For instance, cities like Surat and Jaipur, which focused on raw material production, are now moving into manufacturing and design, while places like Varanasi are excelling in carpets and Tirupur in T-shirts,” Ali said.

Digital Marketing

Talent, though, remains a challenge in smaller cities. “Functions like digital marketing, supply chain optimisation, packaging and product design require specialised skills, often groomed in metros by larger companies,” Ali said. “Entrepreneurs are now figuring out how to train local talent or attract experienced professionals back to their hometowns.”

As per a joint report by market intelligence firm 1Lattice and VC firm Sorin Investments, the D2C market is projected to grow at a compound annual growth rate (CAGR) of 38%.

Delhivery is focusing on improving logistics speed with dark stores. Its AI-driven RTO (return to origin) predictor, built on data from shipments handled, has reduced return risks by 25%. RTO helps improve cash-on-delivery (CoD) operations by analysing customer behaviour, industry trends, and product categories.

“The AI model can tell merchants whether the shipment has a 20% or 80% chance of return. This tech was traditionally available only to large businesses, but we’ve made it accessible to small brands, helping them reduce RTO rates significantly and bring down impact on their profit margins,” Ali said.