Barua’s remarks came after Delhivery
last month gave a muted outlook, saying it expected growth to moderate for the rest of the year.
“When you look at the underlying market for e-commerce in India over the medium and long arc of time, the underlying growth in e-commerce is undeniable,” Barua said at the company’s quarterly call with analysts on Monday. “I think the reason why growth this year perhaps looks moderated…is because a lot of growth was pulled forward during the Covid-19 period and this sort of growth would otherwise have naturally manifested later.”
The exit of Singapore-based ecommerce company Shopee from India in March was also another reason why ecommerce growth rate has been affected this year, he added.
Delhivery’s executive director and chief business officer Sandeep Barasia said the Gurugram-based ecommerce-focussed logistics firm’s expectations of moderate growth for the rest of the year are cyclical and have a precedent.
“You have had periods where the long-term growth rates continue to hold but you have had periods when aggressive discounting became less popular and you had…soft (growth) and ecommerce came back and became a truly convenience category,” Barasia said. “So, you will have these cycles. In today’s funding environment, you will have individual players feeling some pressure.”
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Following its guidance on shipment volumes,
shares dropped more than 30% in two days last month, falling even below its issue price of Rs 487. It has since recovered in recent trade sessions.
The company
released its second quarter results for the ongoing financial year on Friday, recording about 20% growth in revenue and trimming losses.
Delhivery is witnessing increased competition in its core express parcel business, which is its ecommerce delivery business.
ET
reported on November 8 that Amazon was opening up its internal logistics arm Amazon Transportation Services to external clients. This comes after rival Flipkart also externalised its logistics arm Ekart to take orders from other ecommerce companies and brands, which ET was the first to report on April 28.
On the threat from Flipkart and Amazon, Barua said Delhivery had a competitive advantage because of its much lower cost structure compared to peers.
“The express market is a competitive market but to be clear it is not purely determined by one factor which is price,” he said. “It is determined by the reach of the network, determined by the quality of the network, speed of delivery, there are several metrics that customers use to decide.”
Barua said the “state of competition” had existed for several years and that the company had not changed the way it looked at peers.
“…Delhivery has a strategic competitive advantage, which is that our cost structure is significantly lower than the listed or unlisted peers and it is certainly lower than the captive arms of e-commerce companies,” he said. “More importantly, we are designed to serve third parties as opposed to fundamentally designed to serve the first party…”
