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Why Indiatimes Invested In Logistics Co Delhivery

Indiatimes* has bought a minority stake in logistics company Delhivery (SSL Logistics) for an undisclosed amount. Speaking with MediaNama, Gautam Sinha, Director (Technology and E-Commerce) at the company, said that there has been a trend of e-commerce companies building tighter integration and control in the last mile delivery by setting up an in-house logistics team, and Indiatimes was looking for a strategic relationship in terms of systems and processes. Indiatimes e-commerce has been hived off as a separate company “because it’s very different from a content business”, and Subhankar Sarkar, previous a COO at MyDala, has been hired as the COO and Business Head of Indiatimes e-commerce. The company is doing Rs 1 crore in revenue per day, and expects to cross Rs 300 crore in revenue this year. On funding, Sinha said that there are no specific plans yet, and nothing can be ruled out, but “we can look for partners for growth. Could be strategic partners or private brands. But that is not the driving force right now. Right now, it is about executing fast.”

Mohit Tandon, Head of Business Development and Investor Relations at Delhivery told MediaNama that the company currently has 250 people, which includes the feet-on-street, across 9 cities. They’re expanding to 4 more cities in the next 20-25 days, and are planning to cover 30 cities by the end of this year. For Delhivery, Tandon said, the last mile courier part is just a part of it, and they we provide vendor procurement, warehousing, and third party packaging for clients. They have 20 clients, all of the 500+ orders per day scale. Delhivery does around 3500 deliveries per day.

Why Delhivery & On Conflict Of Interest

Indiatimes has been working with Delhivery for 11 months now and they “will continue working with other providers (FedEx, Aramex, BlueDart and others), having a strategic relationship is important,” Sinha said. “Each has different strengths – some better in COD, some are better in returns, some better in cashflow. But the common trend in the industry has been that some of the vendors have built in house logistics for a strategic advantage. We want to achieve this without having to own the entire cost. The logicstics of hiring is 400-500 people in the city. We want to get the advantage of a tightly coupled entity.”

“It allows us better pricing, and a tighter integration with systems and processes. For example, in the business of ecommerce, from the time an order is placed, to the time it is delivered, you want complete visibility and you want to share that visibility transparently with the customer. When it is packed, shipped, in-trasit and delivered, you want to make sure you have realtime information. Services anyone can provide, but once you have deeper relationships, you can launch next day services, branded revices (wearing an Indiatimes t-shirt while delivering). There is lots of value which helps the consumer gain confidence in your brand.”

The more interesting reason, though is the situation around cash on delivery: “A large part of most of the online businesses have started to move towards cash on delivery, and while it works well, reconciliation and float are important for cashflow issues. The faster you manage, the lag can be 3 days to 45 days, depending on the partner. 45 days at high volume, and the money is stuck. Certain new age ecommerce logicstics companies have a 3 day reconciliation.”

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Delhivery appears to offer similar reconciliation to other players, Tandon said, asserting that there will be no conflict of interest: “We work as an independent company. Our biggest clients are already aware of this (investment). Our remittances are faster to anyone, and we have a 3-4 day remittance cycle. Those are services not specific to times, but in general.”

If they’re going to remain agnostic, then what really does a closer relationship mean? Tandon says that they’ve launched services like warehousing first with Indiatimes – “Whatever the new products, it helps us understand their requirements, and jointly launch their product with them. We test and roll out to other people.” What about branded services, like delivery boys wearing Indiatimes t-shirts? “Then that would be dedicated fleet, and it would cost them almost 2x. We’ll be very agnotic to branding anyone in case of delivery.”

*
After launching with Nokia, Indiatimes plans to launch branded commerce stores on August 1st this year. Sinha says that they haven’t seen any impact of Flipkart’s Letsbuy acquisition on the electronics category.

Disclosure: Indiatimes is an advertiser with MediaNama

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Written By

Founder @ MediaNama. TED Fellow. Asia21 Fellow @ Asia Society. Co-founder SaveTheInternet.in and Internet Freedom Foundation. Advisory board @ CyberBRICS

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.

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