Delhivery is one of the largest third party logistics firms for e-commerce companies such as Flipkart, and Paytm. In March 2017, the company raised $100 million in funding from Carlyle Group and Tiger Global to fund infrastructure and automation at the company. In an interview to Hita Gupta, co-founder and CTO of Delhivery Kapil Bharati, talks about the technological innovations and the assistance of Amazon Web Services that has helped the company to become more efficient and move closer to profitability.
In the first year of its operations the company was doing about 450 shipments per day during the Diwali peak season but last Diwali (FY17) it touched a peak of 450,000 shipments per day. On a normal day the company handles about 300,000-350,000 shipments daily. In FY16, the company reported `317 crore in losses and R524 crore in revenues, according to company’s filing with the registrar of companies. Excerpts:
How are you using Amazon Web Services while scaling up the business?
At the time of scaling up our operations we did not have to worry about the backend infrastructure and when the volume went up we only had to upgrade the database. Now, it is more about the combination of different data sets that we are collecting. AWS gives us tools that allow us to ingest this data easily and then pull it out based on our needs.
As the volumes increase, there are very few changes from the infrastructure point of view and it is more about the application. The overall network design also has to change so productivity of the delivery boy increases. How do I change my network to cater to a larger number of shipments which may be from the same area or change the vehicle as there is a change in the size of shipment. Within our facility, we are trying to bring efficiency in the assortation systems.
Currently, how large is your network?
We are present in about 12,000 pin codes with a strong foothold in the north-eastern states. We are in 670 cities but will reach 800 cities in the next two months. We will keep the total number of warehouses or fulfillment centers at 15 with over 900 facilities across the country. The attrition rate among on-ground staff is high but it has been under control in the last one year or so. Currently, we have about 10,000-12,000 people.
What are some of the technological innovations underway?
One of the interesting things we are doing is the ‘Add Fix’. We look at addresses and start disseminating the address based on pin code, city, locality, landmarks. We can start routing and have set up algorithms to get a locality or a sub locality area. So the area becomes much smaller and then we can build models around it.
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Where will you be deploying the new funds of $100 million?
Key focus areas are providing more flexibility to the customers, ensuring service precision at 95%+, and bringing the cost down. We will keep experimenting with the model where we can give more flexibility to our customers. Under the service precision technology, we will be investing heavily into the predictability model and data sciences will be needed for building a better network.
We moved to a dense mesh network for our last mile network in 2014 where productivity went up from 25-26 to 37, in terms of the number of shipments that are delivered by one person in one day. Physical infrastructure such as freight and automation will be another key areas to focus on.
When is the company expected to be profitable?
Profitability is at the top of our minds right now. We have made a lot of investments in the last two years in the infrastructure and growing the network and expect this to help us become profitable some time this year. We expect the losses to come down now and are looking to be profitable by FY18.