Re-Entry Of Shein Bodes Well For Indian Ecommerce Market: Delhivery CEO

Must read

Reliance Retail’s reported partnership bodes well for the ecommerce market which is seeing a slowdown in its growth, according to Delhivery CEO Sahil Barua

Expect the ecommerce space to grow 15%-20% year-on-year, Barua said

Delhivery’s net loss declined marginally 0.3% YoY to INR 1,007.7 Cr in FY23 while operating revenue rose 5% YoY to INR 7,225.3 Cr

Logistics giant Delhivery’s chief executive officer (CEO) Sahil Barua believes that the re-entry of Shein, in partnership with Reliance Retail, in the Indian market would bode well for the larger ecommerce market.

“It is an interesting announcement that Reliance is bringing in Shein. They obviously were a fairly high volume player the last time they were here. I think they significantly improve the sourcing capabilities as well for Reliance… This certainly bodes well for the market.. I think category spending by any single large player, always sort of, you know, it’s like a high tide which lifts all boats,” Barua said during Delhivery’s Q4 earnings call. 

Last week, reports said that oil-to-retail conglomerate Reliance’s retail arm is tying up with Shein to bring back the beleaguered D2C apparel brand back to India. Shein was banned by the Indian government in June 2020, along with multiple other Chinese apps, amid a border standoff between New Delhi and Beijing in the Himalayas.

Barua also said that the re-entry of Shein would drive growth in the ecommerce market next year. He also said that AJIO has been a ‘pleasant surprise’ in terms of growth the ecommerce platform saw last year. 

Quoting Reliance executives, he said that the conglomerate plans to be an aggressive participant in the ecommerce space. He added that the sector is witnessing a shakeup at the top which would fuel growth. 

“I expect ecommerce to continue to grow, sort of, between 15% and 20% year-on-year (YoY),” added Barua. 

Delhivery CEO also said that the ecommerce industry is well poised to play the dual role of replacing offline ‘to some extent’ in some categories and to cater to new categories looking to come online. 

A slowing market where clients are more focused on profit would turn out to be an ‘extreme advantage’ for Delhivery, the CEO said. 

Noting that Delhivery is facing no pricing pressures from its customers, Barua claimed that Delhivery is well-placed to leverage its efficiency at a time when customers are more focused on cutting costs. 

“We are by far the most efficient player in the market and at a time when our customers are counting their costs they will shift more volume to Delhivery. And as I had mentioned, we do not face pricing pressures from our customers. Our express business continues to be profitable, so I view this as a positive and turbulence is always a good thing,” added the CEO.

Delhivery’s net loss declined marginally to INR 1,007.7 Cr in FY23 from INR 1,011 Cr in FY22, while operating revenue rose 5% YoY to INR 7,225.3 Cr from INR 6,882.2 Cr in the previous year.

Talking about the Open Network for Digital Commerce (ONDC), Barua said Delhivery is witnessing ‘quite small’ volumes which it expects to gradually pick up soon. 

Noting that the state-backed platform would be positive news for the industry in terms of partial truck-load (PTL) volumes, Barua said there are a number of other issues that will need to be ironed out regarding returns and refunds. 

A Slowdown Or Impending Growth?

Barua’s comments come at a time when the growth in the ecommerce space has been slowing down. As per a report, the growth in ecommerce’s gross merchandise volume (GMV) slowed down to 22% YoY to $60 Bn in FY23 from 36% in FY22 and 44% in FY21.

After the pandemic-era boom, the growth seems to have waned due to macroeconomic factors and lower discretionary spending by customers. The entry of deep-pocketed giants and conglomerates in the space has also complicated matters for smaller players as the latter look to cut down on expansion and spend more on fueling growth. 

As per an Inc42 analysis, only six of the 19 Indian ecommerce unicorns surveyed had profitable numbers to show in the financial year 2021-22 (FY22). In Q1 FY23, funding raised by Indian ecommerce startups fell with a thud to $633 Mn across 38 deals, a decline of 67% and 62% YoY, respectively. Many such players have also veered towards exploring omnichannel and cross-border expansion to further fuel their growth ambitions

Source link

More articles

- Advertisement -


How Corporates Can Leverage Startup M&As To Drive Growth

Indian corporates have effectively utilised mergers and acquisitions (M&As) to drive growth and create scale, both domestically and globally M&As have been successful in...
- Advertisement -

Latest article