VIKASA invests in emerging growth market segments in India
The e-commerce market in India has already taken off, and it’s poised for even bigger growth in the years ahead. According to data from EasyEcom, an omnichannel inventory management and e-commerce solution provider, sales from e-commerce are on course to hit $67-84bn by the end of 2021, a significant leap from $52.57bn in 2020 and $40.44bn in 2019.
The pandemic has undoubtedly accelerated this growth, but other underlying factors were driving it even before COVID-19 hit. Deeper internet penetration in smaller cities, along with a rise in incomes and smartphone use in these areas, has been pushing online sales up in recent years. Coupled with rapid technological advancements and adoption in India, these realities have set the stage for a surging Indian e-commerce market.
This is particularly noticeable in the realm of e-commerce logistics. This field, which deals with any challenge related to delivering inventory across the supply chain in fulfillment of online orders, is benefiting greatly from technological advancements such as GPS-monitored robots and drones, the Internet of Things (IoT) and telematics. All of this is helping logistics firms deliver a better customer experience and allowing competition to proliferate in the e-commerce logistics space. It’s also been a space ripe for investors and new rounds of funding.
Indian E-Commerce Companies to Watch in 2022
Overall, data from Ken Research forecasts the industry will reach Rs 492.4bn ($6.6bn) by 2025, for a combined annual growth rate (CAGR) of 23.6% over five years. That growth will be driven not just by big, established firms like DHL and FedEx but major India-based players. Here are the top five companies investors should watch in 2022.
VIKASA was an early investor in one of the newest and most nimble startups in the Indian e-commerce logistics market, Parsel. FOunded in 2015, it’s solely focused on intra-city deliveries, offering same-day, slotted, instant delivery service through partnerships with local delivery agents. Services are based on self-learning algorithms that maximize efficiency for allocating orders and prioritizing customer needs.
After launching with an initial founders’ investment of Rs 1.5 crore ($200,000), Parsel saw Rs 10.8 crore ($1.4 million) in revenue in its first year — and received another Rs 10 crore ($1.3 million) in angel funding. The Mumbai-based startup has also rolled out operations in Delhi-NCR, Bengaluru and Chennai.
Although it was only launched in 2012, Ecom Express Private Limited’s leadership team brings over 100 years of experience in Indian logistics and distribution to the table. Based in New Dehli, the company operates in all 29 states of India, covering more than 2,400 towns. Ecom Express boasts an ability to deliver to more than 1.2 billion people — over 92% of Indian’s population.
The company is known for its willingness to innovate and stay ahead of the curve technologically, and private equity firms have taken notice. Most recently, U.K.-based CDC Group invested $20 million, and Swiss global private equity firm Partners Group acquired a $250 million stake.
Delhivery launched in 2011 — and was initially focused on food delivery — but it has since grown into a significant player in the world of e-commerce logistics in India. The company has already fulfilled over 1 billion orders throughout India and now employs more than 66,000 people. Its focus is on using top-notch engineering and technology to deliver a seamless, digital delivery experience across the e-commerce supply chain.
Delhivery is currently the largest independent logistics startup in India. After raising over $1.37bn in funding over its first decade, the Gurgaon-based logistics firm filed for a $1bn IPO in November 2021.
Founded in 2015, this Bengaluru-based startup is named after the mythical “Lord of all horses” in Lord of the Rings. That gives you an idea of its mission to deliver speedy, agile logistics offerings of a mythical scale, particularly to enterprise-level businesses.
From 2015 to 2019, Shadowfax’s daily orders surged from 15,000 to 400,000, and it raised $8 million in Series A funding, $10 million in Series B funding, $22 million in Series C funding, and $60 million in Series D funding. That Series D round all came from Walmart-owned Flipkart in 2019. Since then, the company hasn’t raised additional funds, but it posted revenues of Rs 464 crore ($61.9m) in FY2021.
Another intra-city focused logistics firm, Porter was founded in 2014 and is based in Bengaluru. It offers truck booking, on-demand deliveries, live tracking and more, all with a focus on improving last-mile efficiency in the e-commerce supply chain. The idea is to make it easier and smoother to move goods around once they’re in a specific city.
Currently, the company offers services in 13 cities, but it has grown by triple digits each year since its founding. It aims to have a presence in India’s top 35 markets by 2023, and it appears to have the backing to do it. In October 2021, Porter raised Rs 750 crore ($100 million) in a Series E funding round led by Tiger Global Management and Vitruvian Partners, along with preexisting investors Sequoia Capital India and Lightrock India.
India Continues to Grow its Economy
It’s hard to overstate just how quickly India’s economy is growing. As technology races to meet the new demands brought by the pandemic, rising incomes, and an increasingly tech-savvy Indian consumer base, the e-commerce market presents a promising opportunity for investors for the foreseeable future.
This is especially true for the logistics and technology side of the industry, where many exciting startups are seizing the chance to deliver a better customer experience across the e-commerce supply chain. Thanks to the confluence of technologies like artificial intelligence, automation, advanced algorithms and analytics, these startups are experiencing rapid growth and impressive rounds of funding.
All of this illustrates why VIKASA is committed to India’s growing e-commerce logistics market. We’ve been serving both institutional investors and certain qualified investors since 2010, and we’re passionate about helping them invest in developing Indian markets.
About VIKASA Capital Inc.
VIKASA Capital Inc. is a global investment and capital advisory firm focused on clean energy, fintech and India. We enable growth and success for our clients and partners through deep sector expertise, independent analysis and a differentiated value-added approach.