India’s logistics sector is estimated to account for about 14.4 per cent of the country’s gross domestic product (GDP) according to the India Brand Equity Forum (IBEF), with over 22 million people dependent on it for their income. This rapid growth is propelled by factors like increased domestic consumption, rising e-commerce activities and government’s infrastructural initiatives.
The 106th unicorn, Shiprocket, which averages 4 to 5 billion gross merchandise value (GMV) for merchants in India’s e-commerce market, is delighted with these numbers.
It recently launched the Shiprocket X platform to help Indian merchants send their goods to a global audience. The company’s founder and chief executive officer (CEO), Saahil Goel, tells Outlook Start-Up that while this product has started showing good results in certain countries, it hopes to become more robust in other geographies soon.
Edited excerpts from the interview:
Big Foot Retail Solutions has undergone much iteration since it started in 2012. How have you managed to ramp up Kraftly alongside Shiprocket?
We launched the company in 2012, intending to enable small and medium enterprises (SMEs) to reap the benefits of e-commerce. Our first product, Kartrocket, helped merchants to create and run their e-commerce websites. Then Kraftly came into existence and we noticed that a lot of the SMEs were shifting to smartphones and mobile apps.
When Kraftly pivoted into a marketplace, we encountered a gap in the shipping sector. With the existing players in the market, the SMEs were facing several difficulties and hence, we decided to enter the shipping market.
Over time, we realised that shipping alone is a big enough battle and we pivoted into shipping. In 2017, we launched Shiprocket after shutting everything else off. Refocused on solving shipping, we also changed our external brand to Shiprocket in the same year.
Recently you launched a product called Shiprocket X. How many countries is it currently present in?
Shiprocket X is a platform that helps Indian merchants to send their goods to a global audience. Anyone from a brand selling on Instagram to something created indigenously can be shipped across countries through that platform.
Every global last-mile provider that is relevant is on the platform. From the US, Europe and Australia to Africa, and the Middle East, the platform has coverage over almost all countries.
We may be good in certain countries, which are more in volume; however, in other countries we may become more robust in some time.
What is the average daily shipment managed by Shiprocket and what is your seller base currently in India and globally, respectively? What is your average GMV?
We don’t disclose exact number, but we are powering between 4-5 billion gross merchandise value (GMV) for our merchants in the Indian e-commerce market.
The recent partnership with eBay is also showing early signs of merchants coming to adopt and sign up.
What is Shiprocket’s shipping, fulfillment and warehousing network in India currently and what are its plans to augment it?
Launched during the Covid-19 pandemic, the warehousing unit was set up to help SMEs ship their products during the lockdowns. But then over time, we realised that a lot of merchants didn't want to go through the mind-boggling exercise of packaging, shipping and returns.
How will this augmentation also help it address the issue of improving first-time delivery success?
So, we created a network of fulfillment centers across India and stored all the goods there, and then we did the processing, packaging and so on. We are about 45 to 50 warehouses across India with less than 2 million square feet of space shared by various brands.
As an elastic processing unit, we can get hundreds of brands in one place so that the overall cost of logistics comes down quite and the customer experience goes up. The first-attempt delivery percentage also goes up because the time has come down due to the presence of warehousing units.
Open Network for Digital Commerce (ONDC) recently onboarded Shiprocket to offer intercity deliveries in Bangalore. Are plans underway to make this pan India?
ONDC is a great initiative from the government as the cause of that program is very close to our hearts. We also believe that a platform should unbundle the power into the hands of all the stakeholders rather than concentrating it on one, which is why Shiprocket signed up as its logistics provider.
Since ONDC is not providing a cash-on-delivery option in its first phase of the pilot; the RTO does not seem to be an immediate challenge.
We've also recently tied up with India Post to proliferate into rural commerce. Through this partnership, we aim to tap into the gray area of tier III to VI. Though at present, there is very little business opportunity in that area, we believe that in the next five to ten years, there is going to be the next population that will open avenues for e-commerce.
We are aiming to set up a new model with post offices in rural areas to tack them back into e-commerce. India Post is the backbone of postal services in India and in some ways; they are the world's largest postal network.
So there is an opportunity to offer last-mile rural commerce through them.
In FY22, Shiprocket acquired several businesses, including Wigzo, Rocketbox, and Glaucus. Is that the reason this almost doubled its expenses and led to a consolidated loss of Rs 93.1 crore last fiscal?
We turned profitable in 2019 but as we went further, and scaled our business we realised that certain gaps need to be filled. Our merchant came up with queries like they needed help with fulfillment whereas our larger retailers highlighted that they needed help with business-to-business and omnichannel fulfillment. And then further, we started noticing that there's a need to build a better customer experience.
So, we started focusing on three segments which are shipping, fulfillment and technology.
Will this mean Shiprocket will go easy with acquisitions in the coming years to avoid the resultant stress on its P&L?
When we started the acquisitions, we were only doing shipping, then fulfillment came around, which is in its investment mode. Fulfillment continues to take the investment because when I put out a space, it takes me time to fill it. That's the faster that will grow, the more investment it will take.
Similarly, for technology, I have to first build it for six months or 12 months, then I start selling it, then it will start to break even. So it's about newer products that are going to take the investment.
And I agree that part of it might be due to the acquisitions, depending on where they fit on the trajectory. For example, for the fulfillment, we bought Rocketbox to do the b2b transportation and we also bought a b2b fulfillment company called Glaucus.
We bought Pickrr because they were a number two competitor. And both the founders of both companies felt that it’s better if we consolidate our energy and forces, otherwise will waste a lot of resources. By doing this together, we can branch out and start to focus on and use our funds more wisely.
I would not say that the negative P&L is because of the acquisitions alone. It's largely because we are investing in newer initiatives. And we have done the same in the last year.
As India’s 106th unicorn, Shiprocket raised funds early last year. Does it plan to reapproach VCs and PEs to raise funds this year?
We are very close to turning profitable, maybe we are two quarters away from that and we still have a lot of cash from our fundraising.
So, we don't have a plan to approach VCs and PEs this year but if some investor adds strategic value in some way and gives us market access through different means, we might do it.
There is no plan for continuing fundraising but something might happen, may happen. There is no real milestone or a plan like that, rather it will be opportunistic.