DTDC Express Expects E-Commerce Vertical to Account for Around 50% of Total Biz

Logistics and courier services operator DTDC Express is expecting its e-commerce segment to account for around 50% of its overall business as the company bets big on the rapid commerce amid customers looking for quicker deliveries of their orders.

The company which officially launched its rapid commerce vertical Raftaar earlier this month to offer deliveries as fast as 4-6 hours time, also plans to set up 125 dark stores in the next three quarters to cater to the customers' expectations, DTDC Express CEO Abhishek Chakraborty told PTI.

"Rapid commerce, as we were describing today, is a sweet spot. We know quick commerce is all about minute deliveries, which is very perfect for impulse buys, urgent things, and groceries.

"But, I think overall, there is a whole category of products for which both the brands want a faster, but definitely sustainable, cost-effective solution. And that is what DTDC wants to bring to the table, where brands can access the service without having to burn a lot of capex. They can expand, they can reach not only metros but also tier 2/3. That's been our goal," Chakraborty said.

Overall, this is a part of the DTDC's vision 2030, launched by the company earlier this year, which envisions exponential growth, he said, adding while the traditional part of the business, is very strong and stable, as well as extremely good at generating the cash flows, but "we know these new avenues are where the market demand is, the consumer requirements are." According to a whitepaper unveiled by the company in collaboration with consulting firm Boston Consulting Group on the occasion of the DTDC's 35th foundation day on August 22, India's e-commerce market is accelerating rapidly, with GMV (gross market value) surpassing around USD 80 billion and growing at around 20% annually, driven by digital adoption and rising consumer affluence.

"The shift to faster fulfilment is transforming consumer expectations – 60+% of online consumers now say they would pay a premium for same-day delivery. India's same-day delivery (SDD) market is expected to grow at 20-25% CAGR, reaching over USD 15 billion by 2030," as per the whitepaper.

Faster commerce (quick and rapid delivery models) is growing around 45+% annually, over twice the rate forecasted in China, the whilepaper stated, adding quick commerce services have scaled to 40+ cities across India, reflecting strong nationwide adoption and positioning the country as a fast-evolving market for "need-it-sooner" retail, it said.

Stating that the express industry, which currently stands around USD 5-6-billion and growing very fast and overall has a great future, je said, "within that, these segments--whether quick commerce, rapid commerce-- all part of the larger express supply chain, which means getting things delivered on time, with a great promise, and with accuracy, speed, and reliability." So the company believes that as India grows and it continues to grow at 6.5-7%, average GDP growth rate, we believe the express industry will continue to grow about 2 to 2.5 times that overall, and that would be kind of the average growth rate that we at DTDC also would like to see, Chakraborty said.

He said currently e-commerce accounts for about 16% of the company's business while 21% come from international e-commerce, which would now also include rapid commerce business, and the remaining 63% come from the express parcel, the classic domestic parcels and documents business, segment.

"In the next 2-3 year timeline, I would expect that close to at least 23-24% of our business is going to be e-commerce, while international commerce will be at a healthy 23-24%, which means around 50% overall. The remaining will be the classic domestic business," he said.

He said that the company is looking to set up as many as 125 dark stores in the next three quarters and lined up an investment of ₹100 crore for this fiscal against ₹100 crore in FY 25. The company already has 25 stores in seven cities, Chakrabotyy added.

"Over 55% of our Capex actually goes into technology so innovation, AI, generative AI, Machine Learning is all the big high power stuff which is even more valuable to me than even physical infrastructure where we are going to rapidly invest," he said.

"In the long run, say in the next 2-3 years, I expect around 20-25% continuous investment going on overall in this space not just in rapid commerce but the overall business, which will again get judiciously allocated to the different verticals," Chakraborty emphasised.