DELHIVERY FINAL pdfpptx analysis of delhivery with visite data

Business capstone project

1. RISE OF WAREHOUSING IN TIER-2 AND TIER-3 MARKETS BUSINESS SEMINAR-1

2. IJAZ ALI 2140015 KRIPA RANJAN SARKAR 2140019 ABHISHEK KAGRA 2140001 SURAJIT MAJI 2140038 SUBHAJIT HAZRA 2140032 SUMITABH PAUL 2140037 PREPARED BY

3. WHY THIS TOPIC 01 EMERGENCE OF TIER-2 AND TIER-3 CITIES IN E-COMMERCE 05 Table of contents 02 OPPORTUNITIES AND CHALLENGES FUTURE PROJECTIONS ON GROUND EXAMPLE OF DELHIVERY 04 03

4. WHY THIS TOPIC 01

5. Demand for warehousing is expected to grow around 160 percent to reach 35 million square ft. in 2022, as per JLL’s recent reports. The change in global supply chains has made firms reform their expansion strategies and regionalize operations to cover themselves from contingencies and provide efficient last-mile deliveries. This trend will continue with increasing demand and a rise in manufacturing to benefit tier II and III cities such as Ludhiana, Ambala, Lucknow, Patna, Siliguri, Guwahati, Bhubaneswar etc. The advantages in terms of low rentals, availability of cheaper manpower, low capitalization and high vacancy levels are driving the growth in non-tier 1 cities. The demand in these cities is driven by e-commerce, 3PL, FMCG, retail and automobile industries. These industries are likely to witness a 2.5x to 4x growth from FY20 to FY25.

6. EMERGENCE OF TIER-2 AND TIER-3 CITIES IN E-COMMERCE 02

7. Tier-2 and Tier-3 cities Delhi, Mumbai, Bangalore, Chennai, Hyderabad, Kolkata, Ahmedabad, and Pune are the eight metropolitan tier 1 city in India. whereas 104 cities are classified as Tier 2 cities in India, and the remaining cities are categorized as Tier 3 cities.

8. The need for e-commerce-driven storage will continue to be substantially higher in tier 2 and 3 cities than in tier 1 cities due to the restricted availability of malls and branded retailers in tier 2 and 3 cities. The fast use of the internet, rising consumer expenditure, covid pandemic are the main causes of the rising demand for the e-commerce in tier-2 and tier-3 cities. Most warehousing facilities in small cities are managed by unorganized local players and there is a shortage of high-quality, technologically advanced grade-A warehouses. The main advantage of tier 2 and tier 3 cities is the cost of land and rental cost. Companies are mostly concentrating on Tier-1 cities as distribution centers with primary warehouses in tier- 2 or tier-3 locations.

9. The government’s push for Digital India has proven to be catalyst of growth for tier II and III cities in terms of warehousing. It has forced companies to reform their expansion strategies and regionalize their operations through transformed global supply chains. E-commerce and 3PL are the biggest demand absorbers in tier II and III cities, followed by manufacturing. Consumers in tier II and III markets like those in tier I markets are demanding faster and more prompt fulfillment. This trend is demonstrated by recent reports, which show that over 60 per cent of e-commerce transactions in India take place in tier II and III cities.

10. 03 OPPORTUNITIES AND CHALLENGES

11. By 2030, the ecommerce market in India is expected to be the third-largest by scale with annual GMV of $350 Bn. D2C players’ timely shift to digitalization has thrown open massive opportunities across Tier 2 and Tier 3 cities Tier 2 locations and beyond may account for 88% of the online shoppers between 2020 and 2030 The youth in Tier 2, Tier 3 and even Tier 4 markets are very inspirational. They want new gadgets and want to sport the latest fashion trends. For the fashion category, in particular, there is resistance to shopping online in Tier 2 and Tier 3 cities.

12. 04 ON GROUND EXAMPLE OF DELHIVERY

13. Logistics has always been an important sector for any country, including India, but the space had never seen such a ground-breaking turn before Delhivery came into being. It offers a full suite of services such as last-mile delivery, third-party and transit warehousing, reverse logistics, payment collection, vendor-to-warehouse, vendor-to customer shipping, and more. Delhivery became a unicorn in 2019 when it raised $413 million in a Series F round led by Softbank Vision Fund, Carlyle Group, and Fosun International. It was then valued at $1.5 billion. Delhivery has last been valued at $4.77 Billion in May 2022. Delhivery is disrupting India’s logistics industry with the help of its proprietary network design, infrastructure, partnerships, engineering, and technological capabilities.

14. Delhivery brings unparalleled cost efficiency and pan-India reach to its 10,000+ customers. Driven by its mission to shrink time and distance, Delhivery aims to make the world a smaller place for its customers. Delivery has a lot of partners with whom it aims to increase the product reach and to cope with those partners, the company also offers third-party warehousing and transit warehousing. Along with having numerous e-commerce brands like Flipkart, Amazon, eBay, Snapdeal, and Healthkart, as its customers, Delhivery also manages its customer base that comprises many other businesses and individuals. The vision of the company is to "become the operating system for commerce in India, through a combination of world-class infrastructure, logistics operations of the highest quality and cutting-edge engineering and technology capabilities."

15. NETWORK MODEL OF DELHIVERY With a presence in every state and 18000 PIN numbers—more than 90% of all PIN codes in India—Delhivery has established a nationwide network. Their network architecture consists of 2,948 direct delivery centers, 244 service centers, 132 intermediate processing centers, 21 automated sort centers, 93 fulfilment centers, 35 collection sites, 31 returns processing centers, and 96 gateways. Their self delivery network is expanded by 1,209 partner sites that increase their reach, and offer vital flexibility and redundancy, and Spoton's service centers are expanded by 205 extra locations run by business partners.

16. Delhivery has currently been hailed as India’s leading supply chain services company. It is one of India's largest B2B, B2C, and C2C Logistics Courier Service providers. The company is best known for the economical shipping rates that it charges for its services. Furthermore, Delhivery claims to have - No Setup Fees or Subscription Charges. The services offered by Delhivery can be divided into 3 primary departments Warehousing - Flexible warehousing across 40+ cities in India Transportation - Largest pan-India reach across 19000+ pin codes and 2500+ cities E-Commerce - Ready integration with Shopify, WooCommerce, Magento & OpenCart. Delhivery partnered with many organizations thus far. Among its prominent partnerships include its collaboration with Volvo in August 2020 with an aim to add tractor-trailers into its express network. DELHIVERY- BUSINESS AND REVENUE MODEL

17. Integrated solutions: Delhivery provides a full range of logistics services including cross-border express and freight services, supply chain software, warehousing, heavy goods delivery, express parcel delivery, , and value-added services like e-commerce return services, and assembly services, and fraud detection. Proprietary logistics operating system: Their internal stack of logistics technology is designed to satisfy the changing demands of modern supply chains. They have more than 80 apps that they use to deliver a range of services, and their platform manages transaction flows from beginning to finish. Data intelligence: To support real-time operational decision making, Delhivery collects, organizes, stores, and processes high amounts of transaction and environmental data KEY-CHARACTERISTICS

18. Decentralized model: As the Decentralized model is much better than the Hub and spoke model since the process becomes long in that delaying the services. But Delhivery chose a totally different path having distributed channels to operate through. Real-time tracking: Delhivery was the first one to allow the customers to track their orders. They introduced real-time tracking in this sector. With this, customers can get complete knowledge of their order being packed, shipped, or delivered on their mobile phones. Fast transactions: Earlier, the sellers used to get money lately. It’s because the payment collection system wasn’t smooth enough. But now, they ensure that the payment is delivered within 2 days making the small players join the market. USP OF DELHIVERY

19. Today, smart ‘Grade A’ warehouses equipped with world-class digital and physical infrastructure are being developed by the operators to facilitate efficient supply chain operations for any business vertical. Modern warehousing has become relevant due to factors such as regulator compliance, security, and quality assurance, causing organized players to raise the bar of efficiency. With the infusion of AI, companies are wanting to adopt automation to increase their efficiency, consolidate their businesses, increase safety initiatives, contactless business processes, and Grade A spaces. Rising demand from 3PLs, pharma, e-commerce players is the key growth driver of consolidated, efficient, and strategically located grade ‘A’ warehouses as contactless and digitally managed spaces are gaining prominence due to COVID-19. Functions such as imaging, tracking, cloud integration, video-conferencing, voice/face recognition, and personal assistants are being implemented in tier 2 and tier 3 cities is to be upgraded. A STRATEGIC SHIFT

20. Supply chain resiliency and robustness is of importance when it comes to transporting cargo from one point to another. The ongoing pandemic not only led to this shift to tier 2 and 3 cities, but also accelerated opportunities in innovation and digitalization in warehousing sector. Providing customers’ end-to-end visibility, cargo tracking options, transparency, and agility, helped warehousing sector to grow rapidly. To meet the demand, the manufacturers and warehouse operators geared up to increase productivity and capacity to meet customers’ needs and create value. Ever since the pandemic struck, it raised an impulse towards D2C (direct-to-consumer) business models, which means brands operate without physical stores. Deployment of emerging technology such as data analytics, Augmented Reality/Virtual Reality (AR/VR), Blockchain and Chatbots improved online customer experience and supply chain transparency . ROBUST & RESILENT SUPPLY CHAIN MODELS

21. Multimodal connectivity is crucial area of concern when it comes to warehousing in tier 2 and 3 cities. With right growth strategies in place, the industry is gearing up to fulfill high demand by creating best-in-class supply chain business models and multimodal connectivity options. Mismatch and deficiency in connectivity, development timeline, hinterland logistics infrastructure, development fund, manpower availability among others will lead to bottlenecks in the desired integration process. Connectivity via good road infrastructure in close proximity to freight corridors, airports and ports are important factors to consider, while considering these locations. the industry is relying heavily on the government projects such as Bharatmala and Sagarmala whose aim is to create connectivity between road and port. While Jal Shakti is the programme to use large Indian inland waterways, Gati Shakti is launched to focus on railway movement. MULTIMODAL LINKAGE REQUIREMENTS

22. Government’s initiatives such as Aatmanirbhar Bharat, Ease of Doing Business, Make in India and Gati Shakti focused on improving infrastructure and connectivity, enhancing quality, scale, competitiveness and efficiency. It will not only fortify warehousing demand but also attract foreign investors to the Indian market. • The state of the art automated asset class facilities to cater to all the warehousing needs—from manufacturing, storing, handling, packaging, and distributing—are being developed to create a benchmark globally. As the asset class is transforming towards a built-to-suit model, support from the government towards Land Regulatory Policies to reduce the time span between a proposal and approval, can commence operations at the earliest thereby producing quicker and more returns. TRANSFORMING WAREHOUSING AND LOGISTICS SECTOR

23. Secondly, after the intensity of the pandemic subsided, the industry is witnessing higher cost of input, with higher construction and land costs, but decrease in profit margins. Policies and sanctions towards the same can also be of significant help. The government-led infrastructure development can enable the consolidation of warehouses for companies and help developers with options of larger land parcels slightly further away from city peripheries. The industry expects the growth momentum to continue as the economy demands quality and efficiency in movement and handling of cargo. Experts expect logistics parks to integrate inland waterways, ports, and railways as value added service proposition to their occupiers. Land acquisition around cities is becoming increasingly difficult. Infrastructure developments will create opportunities for new warehousing zones and help build an ecosystem.

24. DETAILED ANALYSIS

25. FUTURE PROJECTION 05

26. FUTURE PROJECTIONS The tier 2 and 3 cities witnessed a surge in warehousing activities, especially during COVID-19, the key advantages being marginally good population with relatively lower spending capacity, affordable real estate, and labor. With digitalization, e-commerce boom, Gati Shakti, Make in India, and Ease of Doing Business, the warehousing sector is ready for a boom, forecast experts. From retail, electronics, agriculture products to pharma— smart Grade A facilities in tier 2 and 3 cities, in the coming years, will cater to the increased demand. Firms will continue to work in a decentralized manner of having multiple warehouses. With more e-commerce firms emerging for almost every industry, the demand and success of warehouses in remote locations will always be there.

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