E-commerce enablement aggregator Shiprocket, which is grappling with widening losses, is in talks to integrate Meesho’s in-house logistics arm Valmo onto its platform.
This will help the core shipping business which accounts for 70-80% of revenues, but faces margin pressures and increased competition. Saahil Goel, CEO and co-founder of Shiprocket confirms the company is trying to see if Valmo can be plugged into its platform as a supply partner. “Our approach is to bring any and every kind of model onto our platform,” he said.
Meesho is currently the largest customer in the third-party logistics space, with about 50% market share. The use of Valmo has reduced Meesho’s logistics costs by approximately 5%. It is being used to handle 20-22% of Meesho’s orders, with expectations to double this capacity in the next 12-18 months.
While Goel claims the core shipping business has been profitable since 2019, Shiprocket’s diversification efforts have come at a cost. Net losses widened from Rs 63.6 crore in FY22 to Rs 333.8 crore in FY23, despite revenues surging from Rs 634.5 crore to Rs 1,126.7 crore in the same period. Other expenses more than doubled from Rs 503.6 crore to Rs 1,104.1 crore. The operating margin deteriorated from -10% to -29.6%, following the cost of diversification.
The results can be partly attributed to Shiprocket’s recent acquisitions. In FY22, the company acquired Pickrr and Glaucus Supply Chain Solutions, among others. Pickrr saw its revenue grow from Rs 205.8 crore in FY22 to Rs 306.5 crore in FY23. However, its net loss also increased from Rs 52.3 crore to Rs 105.1 crore during the same period. Glaucus Logistics, another FY22 acquisition, was bought in better financial health, albeit on a smaller scale.
On the company’s core value proposition, Goel notes that although price differences of 30-40% exist between courier providers on their platform, volumes are distributed equally. Goel also highlighted continued customer loyalty, with merchants staying despite higher prices due to the convenience offered.
Shiprocket’s checkout solution, launched 18 months ago, has reportedly increased conversion rates by 10-15% for smaller merchants and is now live on about 1,500 websites.
The company claims it serves over 150,000 active sellers annually, processing an annualised Gross Merchandise Value (GMV) of over Rs 30,000 crore ($3 billion). The platform has seen over 4 million total sign-ups, delivering more than 300,000 shipments daily and catering to over 100 million consumers.
Goel says the company has not yet given up on its store-front plans, adding Shiprocket will “continue to diversify” into areas including cross-border e-commerce, checkout solutions, warehousing, and fulfilment services. The company is also exploring logistics for precious fine jewellery and partnerships for drone deliveries, though Goel estimates widespread drone use for last-mile delivery to be at least three years away.
Shiprocket aims to reduce international shipping costs to $7-8 per parcel from the current $9 average and cut delivery times to around a week from the current 9-day median. This move targets competition with Chinese providers who dominate the market.
Sources said Shiprocket is in talks to raise $120 million, possibly involving Koch Industries’ first investment in India. Shiprocket has raised a total of $323 million to date and is valued at $1.2 billion as of October, 2023 when it raised $11 million from Afos. Notable investors include Temasek, PayPal, Lightrock, and Zomato. Recent data shows Shiprocket holding a 34% share in the e-commerce logistics aggregators’ space, leading competitors like ClickPost and ShipBob (both at 15%), Unicommerce (13%), Gan (11%), and Bharat Supply (10%)