Delhivery Business Model | How Delhivery Makes Money

One of the biggest logistics and supply chain firms in India, Delhivery is renowned for offering businesses in a variety of industries end-to-end delivery services. Delhivery has carved out a sizeable portion of the Indian logistics business thanks to the growth of eCommerce and the growing demand for prompt, dependable delivery.

About Delhivery

Sahil Barua, Mohit Tandon, Bhavesh Manglani, and Suraj Saharan founded Delhivery in 2011, and since then, it has emerged as a major force in the logistics industry. Delhivery began as a delivery business specializing in eCommerce but has since grown to offer a variety of logistical services, such as supply chain management, warehousing, freight services, and transportation. However, how does Delhivery turn a profit in a market this cutthroat? Let's examine Delhivery's business model and learn how it makes money.

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Delhivery Business Model

Delhivery offers logistics services to manufacturers, merchants, eCommerce enterprises, and individual consumers using a business-to-business (B2B) and business-to-consumer (B2C) model. The company provides a variety of services that assist companies better manage their logistics and supply chain operations. Delhivery's main line of business is courier and package delivery; it manages last-mile deliveries for people, companies, and eCommerce platforms. These services involve delivering products straight to clients' doorsteps after collecting them from vendors or storage facilities. Delhivery is an important participant in the rapidly expanding online retail sector since it collaborates with some of the biggest eCommerce sites in India, including Amazon, Flipkart, and Myntra.

In addition, Delhivery offers third-party logistics (3PL) services, such as order fulfillment, inventory control, and warehousing. The brand provides businesses with choices to carry goods across great distances by operating a freight (both domestic and international) and transportation business in addition to parcel delivery. It provides all-inclusive supply chain solutions, such as distribution network planning, inventory control, and warehouse management. In order to assist companies in managing foreign shipments, the company has also ventured into cross-border logistics.

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How Delhivery Makes Money | Delhivery Revenue Model

Delhivery's profitability is influenced by a variety of revenue sources. Small enterprises and major international corporations are among the many clients the company serves thanks to its extensive range of logistical services.

• Generating Revenue Through Delivery Fees: The delivery fees that Delhivery charges people and businesses for parcel and courier services are its main source of income. The product size, delivery distance, and service speed (e.g., same-day or next-day delivery) all affect these costs.
• Generating Revenue Through Freight and Transportation Charges: Delhivery makes money by providing goods and transportation services, which allows companies to transfer their goods over greater distances. Rail, aviation, and road freight are all included in this. Delhivery can negotiate competitive rates with carriers while keeping a solid profit margin because of its capacity to handle big volumes of goods both domestically and internationally.
• Generating Revenue Through Warehousing and Fulfillment Services: Delhivery makes money by providing businesses with fulfillment and warehousing services. Delhivery is paid by businesses that require order fulfillment and storage services to handle their inventory, package orders, and deliver goods to clients.
• Generating Revenue Through Supply Chain Consulting and Solutions: For companies that require assistance in streamlining their logistics processes, Delhivery provides supply chain solutions. Distribution network planning, inventory optimization, and warehouse management are some of these services.
• Generating Revenue Through Cross-Border Logistics Fees: Delhivery's cross-border logistics services, which include international freight forwarding, customs clearing, and other cross-border logistics services, generate extra income for the company.

Delhivery's revenue grew by 12.8%, reaching INR 2,189 crore in Q2 FY25, up from INR 1,941.71 crore in Q2 FY24. Additionally, it made a profit of INR 10.2 crore in Q2 FY25, compared to a loss of INR 102.9 crore in Q2 FY24. Whereas, the company's total expenses increased by 6.8% to INR 2,294.2 crore during this period.

An 8% year-over-year (y-o-y) increase from INR 1,796 crore in Q2 FY23 to Rs 1,942 crore in Q2 FY24 was reported by Delhivery Limited as revenue from services. Earnings before interest, taxes, depreciation, and amortization, or adjusted EBITDA, lost INR 125 crore in Q2 FY23 but INR 13 crore in Q2 FY24, a 90% year-over-year decrease. The loss after tax decreased by 59% year over year to INR 103 crore in Q2 FY24 from INR 254 crore in Q2 FY23 over the same period.

USP of Delhivery

Delhivery has built a nationwide network with a presence in every state, servicing over 18,600 pin codes. 24 automated sort centers, 94 gateways, 2880 direct delivery centers, and a team of over 57,000 people make it possible for the company to deliver 24 hours a day, 7 days a week, 365 days a year.

Delhivery SWOT Analysis

Delhivery Strengths

• Over 18,500 pin codes are covered by Delhivery's network in India.
• Express package delivery, truckload freight, cross-border services, and supply chain solutions are just a few of the many services Delhivery provides.
• To address operational issues, Delhivery employs technology including artificial intelligence, machine learning, and operations research.
• The data intelligence platforms offered by Delhivery reduce the possibility of shipment delays and damage.

Delhivery Weaknesses

• Delhivery's express-parcel division, which generates 62% of its sales, saw a significant downturn in the March quarter of 2024.
• Given how labor-intensive Delhivery's operations are, any shifts in the supply of qualified workers could have an effect on the company.
• Any technological malfunctions or interruptions could have a detrimental effect on Delhivery's operations.
• Delhivery's profitability may be impacted by any changes to its relationships with its network partners and other third parties.

Delhivery Opportunities

• For Delhivery, the expansion of e-commerce in India offers substantial prospects. The need for trustworthy last-mile delivery services is growing as more customers shop online.
• Delhivery has the chance to boost the efficiency of its logistics by further developing its technological infrastructure.

Delhivery Threats

• Delhivery faces competition from global firms like DHL and FedEx, as well as other sizable logistics firms like Blue Dart, Gati, and Ecom Express. Delhivery must always enhance its offerings to keep ahead of the competition as more companies request delivery that is quicker and more dependable.
• With costs for labor, fuel, transportation, and warehousing, the logistics sector is extremely cost-sensitive. Delhivery faces the problem of controlling these expenses while preserving profitability, particularly as the business grows both domestically and abroad.

Conclusion

The core of Delhivery's business strategy is offering a broad range of logistical services, including supply chain management, cross-border logistics, and last-mile delivery. Delivery fees, warehouse services, freight costs, and technology-driven logistics solutions are how the business makes money. Delhivery is in a strong position to benefit from the rising demand for dependable and effective logistics services as India's e-commerce industry expands. The company is expected to continue to be a significant participant in the Indian logistics sector while preserving profitability and growth by concentrating on innovation, operational effectiveness, and market expansion.

FAQs

What is Delhivery?

Delhivery is a prominent courier service, logistics, and supply chain solutions company that enthusiastically works with individuals and businesses.

How does Delhivery make money?

Delhivery makes money through express parcel delivery, freight services, supply chain solutions, and last-mile delivery, charging fees for logistics and transportation.

What is Delhivery business model?

Delhivery's business model focuses on providing logistics and supply chain solutions, including express parcel delivery, freight services, and last-mile delivery, leveraging technology to improve efficiency and scalability.