ETtech Q&A | We don't intend to get into last-mile quick commerce delivery: Delhivery CEO Sahil Barua

Listed third-party logistics company Delhivery is looking to drive its next phase of value creation by expanding high-growth businesses, while continuing to improve margins, founder and chief executive Sahil Barua told ET in an interview.

The Gurugram-based company, which went public in May 2022, had been the bellwether for the performance of India’s ecommerce industry until the December 2025 listing of Meesho. Barua said that the company was increasingly witnessing vertical ecommerce companies and direct-to-consumer (D2C) brands taking market share away from horizontals such as Amazon, Flipkart and Meesho. He also spoke about the limits of the in-house logistics arms of ecommerce platforms, the economics of quick commerce, and what has changed for Delhivery after becoming a public company. Edited excerpts:

Delhivery listed four years ago. What’s changed since then?


When we went public, we had said that the industry was going to consolidate over time, that margins were going to improve as operating leverage comes in, that our focus is going to be on profitability and improving fundamental economics, and that we’re going to start expanding beyond ecommerce. That’s what we’ve been doing for four years. We’ve had a fairly stable base of investors over the past four years and they’ve been supportive of our strategy. Surprisingly, it hasn’t been as stressful as I had imagined.

Also Read: Delhivery investors cash out as stock nears IPO price

What about the stock performance over the last four years?

We have very limited control over the stock price. Obviously, there are short-term reasons for it to go up or down that are beyond our control. One example is that we had a very strong end to the last financial year. It was the first time in the 15 years I've been here that Q4 was better than Q3. Normally, in our industry, Q3 is the strongest quarter.

There are a lot of indicators investors are looking at, and they can see that we've been executing exactly the way we said we would. Beyond that, I can't really worry about the stock price on a daily basis.

The market seems to have rewarded Delhivery for becoming profitable. What do you think will drive the next leg of value creation?

Value creation in Delhivery will happen from continuing to grow across all of our verticals. Our part-truck load business…when we started out, people said it’s a boring business, which grows at the rate the GDP does. But we’ve been growing more than 20% a year because that industry is consolidating towards high-quality players and the margins are going up.

There are also a few verticals that are underpenetrated. One example is agri logistics, where we’ve done very little but have always wanted to do something. So, we’ll slowly start getting further back in the value chain. We have now started doing what’s traditionally called oversized cargo.

For Delhivery, the value creation will come from growth from continuing to expand capacities. The rest will come from margin improvement, which fortunately for us, is completely predictable. There are other things that we’ll continue to do, including crunching our working capital cycle, improving cash conversion in our business, and bringing capex and corporate overheads down over time.

Also Read: Exclusive | Quick commerce eating into market share of kiranas, not ecommerce: Delhivery CEO Sahil Barua

Delhivery has been growing faster than the ecommerce industry for the last several quarters. What has led to this growth and what’s the focus going forward?

The market has grown over the last year, and we're seeing healthy underlying volume growth across the industry.

SME shippers is a case in point. Earlier, many SMEs relied on local couriers and unorganised logistics providers. Now, with Delhivery Direct, that business has been growing at over 50% annually for the past two years. I don't know if it was always growing at that pace, but what's clear is that it's now becoming a meaningful part of our volumes.

Similarly, D2C and vertical ecommerce have become a large and fast-growing business for us. At the overall level, vertical players appear to be taking share from horizontal marketplaces. Horizontal players still have strong value propositions, especially during major sales events and in categories like electronics. But in segments such as fashion, D2C brands seem to be doing well, and we have high penetration in that space.

There is also an ongoing shift from in-house to outsourced logistics. I think that shift will accelerate because I've never seen a cost environment like the current one. Fuel prices have risen over the last four months, and labour costs are also increasing as revised labour codes come into effect. As costs rise, more efficient operators will have a greater advantage over less efficient ones.

Another trend is consolidation. We acquired Ecom Express. Around this time last year there were four or five major players in the market. Today, there's one fewer, and those volumes have also contributed to our growth.

How many players do you think there will be at the same time next year?

A lot depends on the appetite of private capital. Once you already have Blue Dart, Delhivery and Shadowfax, all with strong competitive positions in our respective segments, it's very difficult for another independent, third-party ecommerce logistics company to survive, whether that's Xpressbees or anyone else.

The problem is that there simply isn't enough incremental volume left to capture because the rest of us have already established strong positions. At the same time, costs are rising.

So, if you ask me, there's still room for one or two players to exit the market gracefully. If that doesn’t happen and private capital continues to remain invested, the returns on that capital will be negative.

Also Read: Delhivery January-March operating revenue jumps 30%; net profit flat at Rs 72 crore

There’s been some pointed commentary between Delhivery and Meesho in recent earnings calls. Why is that?

Most people seem to read this as a zero-sum game between ecommerce companies and logistics companies. It really isn't. The more volume we handle, the more efficient we become, and we're able to pass those efficiencies on to our customers. We've always been very clear that ecommerce operates on razor-thin margins. Every rupee they save on logistics is a rupee they can invest in customer acquisition or improving the customer experience.

Meesho has its own logistics network, and we understand that. Others are experimenting with in-house logistics as well. We believe there are limitations to that model.

Amazon and Flipkart have done this… they started their own logistics and never went back. How do you solve for the fact that self logistics is something every large ecommerce company would want eventually?

The biggest issue is that, at some point, the financial benefits of outsourcing significantly outstrip the perceived control of doing logistics in-house. There isn't a meaningful gap in speed or reliability between in-house operations and what leading third-party logistics companies can deliver.

To some extent, there's also a sunk-cost fallacy. Companies have invested heavily in first-party logistics and feel they need to keep supporting it. But over time, many of these operations have turned out to be heavily loss-making and a drain on resources.

At the same time, all of them are expanding into low-value ecommerce. Amazon has Bazaar and Flipkart has Shopsy. Once you start serving those segments, every rupee spent on logistics matters a lot.

How do you see ecommerce companies entering the quick commerce space after losing market share to 10-minute delivery players?

Specific ecommerce segments that are susceptible to quick commerce, such as packaged foods, certain electronics, and beauty and personal care have been affected. But quick commerce doesn't really impact low-value ecommerce or fashion, where the product assortment is much broader. In those categories, we've actually seen volumes continue to grow at a healthy pace.

We’ve consistently said that ecommerce is a 15-20% growth market, and that's broadly what we've seen. Meesho has grown faster than that, while Flipkart has grown a bit slower. On average, though, the market is still growing within that range.

Earlier you had questioned quick commerce economics…do you believe the model is proven now with Blinkit showing profitability at its scale?

The industry is still subsidising consumers. Once you add up the capital expenditure, the overall economic cost of the business is very high.

What's clear is that a consumer need has been created and proven. Blinkit has done a great job of demonstrating that there's money to be made in quick commerce. The bigger question is whether all the players can make money at the same time. It's hard to see how.

Quick commerce is here to stay, and certain categories will continue to be well suited to it. But can you profitably deliver millions of products to consumers in 15 minutes in an inflationary environment, with real estate costs continuing to rise?

What’s Delhivery’s play in quick commerce?

Over time, we'll do a couple of things. We'll provide warehousing and transportation for everyone supplying into the quick commerce ecosystem. But we don't intend to do the last-mile delivery from a dark store to the consumer. We've deliberately stayed away from that business so far.

That could change if the model evolves and delivery becomes more efficient through aggregation, clubbing and pooling of orders. It would also become interesting for us if the dark store ecosystem consolidates into multi-platform dark stores serving multiple players.