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Ecommerce biz down 27% YoY for Gati; shifting to larger appliances

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Cash on Delivery is now up to around 60% of ecommerce deliveries for logistics player Gati, up from 50% last quarter. While the effect of demonetization on the business has worn off, Bala Agnihotri, Deputy MD at Gati said on the earnings conference call, that there is a residual effect: "The COD residual effect of demonetization is the change of COD business that has come down. If you remember previously we used to share with you numbers of 70%-80%. It is now stabilized", at "around 60%. Q1 wasn't great for Ecommerce at Gati - it is the weakest quarter of the year for the company, but the year on year comparison doesn't look good: Ecommerce was down 27.2% year on year to Rs 42.2 crores in Q1 vs Rs 58 crores in Q1 last year (pre-demonetization and GST). Quarter on quarter, even though QoQ isn't relevant for such a seasonal business, was down 17.6%. This is in comparison with a situation where there was 70-100% growth for Gati, year-on-year. "But in the last year the industry growth fell precipitously low and this is through across all retailers, this is through across all logistics companies in e-commerce space as well." Gati expects "FY17-18 e-commerce business to be around 30%-35% growth". Signals A few signals from the conference call: 1. "unmistakable pricing pressures also in the e-commerce industry" 2. Larger parcel sizes: "a change that we are experiencing in e-commerce which looks like there is going to be a revival in the…

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

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