Delhivery expects more consolidation in the delivery ecosystem, and the era of suicidal pricing in the market has ended, the company said during its Q4 FY25 earnings call on Friday, adding that ‘qualified staff’ from acquired company Ecom Express will be absorbed into its operations.
Sahil Barua, CEO and founder of Delhivery, said that aggressive deep discounting by competitors—which led to prices below cost—is no longer sustainable.
“Our anticipation was that this pricing was suicidal and untenable because it appeared to be at a negative gross margin. I think suicidal pricing in this industry has more or less ended at this point, as most players have seen the consequences of such discounting,” he said.
Delhivery turned profitable for the first time in FY25, posting a net profit of ₹72.6 crore as revenue rose 6% year-on-year.
Referring to the Ecom Express deal, Barua said, “I think what this deal has done is signal that if you are a loss-making network in express with no path to profitability, consolidation—or exit—is an inevitable outcome.”
He added that the industry was plagued with excess unproductive and loss-making capacity, not just within Ecom Express but also among other players.
Delhivery acquired rival logistics firm Ecom Express in an all-cash deal worth ₹1,407 crore in April. Less than a year ago, Ecom Express was valued at around ₹7,000 crore. The acquisition is pending approval from the Competition Commission of India, after which Ecom Express will become a Delhivery subsidiary.
Barua explained that integrating Ecom Express is significantly different from and less risky than the 2021 SpotOn Logistics acquisition. There is nearly 100% customer overlap, with similar processes and systems already in place.
Delhivery acquired Bengaluru-based SpotOn in August 2021 for ₹1,600 crore in an all-cash deal. SpotOn, established in 2012, specializes in business-to-business express logistics services across various sectors, including automotive, engineering, pharmaceuticals, electronics and lifestyle.
Ecom Express handles express parcel volumes that are about 40% of Delhivery’s, but the freight tonnage is much lower at about 20%, which simplifies the integration.
Integrating well
Only a few facilities will be retained—mainly where capacity is tight or repurposing is feasible—and another bright spot is that no new technology will be needed. He also noted that Ecom Express’s experienced workforce is familiar with e-commerce logistics.
“The regular iteration in Delhivery’s network itself will provide a sufficient room to absorb all of the qualified staff from EcomExpress across our operations around the country,” he added.
Barua explained that the purchase price includes about ₹300 crore for integration costs.
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The Delhivery founder added that lease liabilities with lock-in periods are a key factor for managing integration costs. To manage this, Delhivery plans to either repurpose these facilities quickly within its network or negotiate shorter lock-in terms with landlords, having accounted for the full cost.
Noting the increased losses among competitors, Barua said, “There were too many players in this market. Our acquisition of Ecom Express has not changed that dynamic. Our remaining competitors with models similar to Ecom have also seen an expansion in their losses in quarter four.”
Rapid commerce
Last quarter, Barua had explained that the rapid commerce model faces inherent limitations in scale and potential, and he reiterated this point this time, too. He also noted that brands typically stock only 10-15% of their stock keeping units (SKUs) for quick delivery, which further reduces the market opportunity.
Delhivery’s Rapid Commerce is a logistics service designed to provide ultra-fast deliveries, typically within two hours.
Delhivery COO Ajit Pai explained that as of this quarter, they operate in three cities with around 18 dark stores. The older dark stores process about 350 to 400 orders daily, while the newer ones are still ramping up. He noted that it’s still early days and that they expect this growth to take time. Overall, they plan to have 50 dark stores by the end of the fiscal year.
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Delhivery’s dark stores need roughly 700-800 orders per day to break even, and Pai expects individual stores to take about 4 to 5 months to reach that level.
Barua said the company plans to expand into the business-to-business (B2B) category rather than focusing solely on business-to-consumer (B2C) clients.
“We now have B2B customers who are saying that they would actually like to participate in a faster form of commerce. For example, there are players who want to deliver spare parts to various parts of their supply chain or time-critical machinery to various parts of their supply chain within 3-4 hours and so on,” he said.
