Ecommerce's in-house delivery turn flips third-party logistics biz script

Time of India

a day ago

Delhivery CEO Sahil Barua said during the company's recent earnings call that further consolidation in the industry is likely after the sale of Ecom Express to Delhivery for Rs1,407 crore in April.
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The largest Indian ecommerce firms have moved deliveries in-house, hurting third-party logistics (3PL) players and leading to a consolidation in the sector. Amazon , Flipkart and Meesho now account for about 82% of India's ecommerce parcel volumes, according to a report by ICICI Securities. This has forced pure-play logistics operators to draw up new ways to stay relevant.As Meesho's parcel volumes are increasingly handled by its logistics arm Valmo , improving yields has become more important than chasing market share for 3PL companies, executives and analysts said. The Bengaluru-based online retailer, which caters to smaller towns and value-conscious shoppers, had historically worked with logistics providers including Delhivery , Ecom Express, Shadowfax and Xpressbees. Now, Valmo functions as an aggregator and allows sellers to choose a transporter to fulfil orders.'Our channel checks indicate Meesho was routing around 70% of shipments through its captive arm Valmo in March 2025 compared to around 30% in March 2024, and 5% in March 2023. This indicates the growing control of horizontal platforms over logistics operations,' ICICI Securities said.Delhivery CEO Sahil Barua said at the company's recent earnings call that more than 100% of the logistics industry's profit pool currently resides with Delhivery, underscoring how many rivals remain loss-making. He said further consolidation is likely after the Rs 1,407 crore Ecom Express acquisition in April.'Despite Delhivery handling a large share of Meesho volumes, the impact on others may be more significant. Delhivery has already begun focusing on yields and exploring segments like rapid commerce and hyperlocal delivery,' said a senior executive at a logistics firm. Delhivery's acquisition of Ecom Express strengthens its position in the 3PL space, with the two companies having 100% customer overlap and 95% revenue overlap. For Ecom Express, key clients include Meesho, Amazon, Shiprocket and Nykaa.Analysts said Meesho was unlikely to shift all parcel volumes to its own network, which could give Delhivery some pricing power. 'Delhivery's muted growth in ecommerce shipments in FY25 was driven by competitors undercutting on price. But with consolidation playing out, it may regain pricing leverage,' said a Mumbai-based internet analyst.The company's express parcel revenue and volumes rose 5% and 2% year-on-year, respectively, in FY25 Barua acknowledged pricing pressure from rivals but said it should ease. 'Historically, Delhivery has led pricing in this industry. Last year was an exception,' he said. 'Competitors made pricing decisions to gain short-term share, which we believed were unsustainable as they implied negative gross margins.'JM Financial analysts said headwinds for Delhivery may subside in the coming quarters as Meesho has limited scope for further shifting volumes and quick commerce firms are slowing down expansion.'Management expects growth to return in FY26 with the Ecom Express acquisition, retaining over 30% of volumes. Positive impact was already visible in April and May,' the report noted.