Welcome to this week’s edition of TOPICAL WEDNESDAY! Today, we will cover Ecom Express acquisition by Delhivery.
On 5th April, Delhivery, India’s logistics giant, surprised everyone by announcing the acquisition of its biggest competitor, Ecom Express. The acquisition received mixed to negative reactions, as it reiterated the harsh reality that logistics is a difficult business to crack, with few companies managing to survive. Further, it remains uncertain whether Delhivery will successfully absorb Ecom Express’s operations, potentially adding another layer of complexity to an already intricate operational network. As a result, Delhivery’s stock tumbled down by 9% (though a significant loss has since recovered).
That’s one part of the equation. The second, and perhaps more alarming, aspect is Ecom’s valuation. Delhivery is acquiring its closest competitor for just Rs. 1,407 crore ($165 Mn) in an all-cash deal. This figure is startling, representing an 80% value erosion from Ecom Express’s last valuation of Rs. 7,300 crore ($850 Mn) during its previous funding round. This dramatic value destruction has understandably spooked venture capitalists and startups across India. After nearly a decade and a half of operations and roughly Rs. 2,000 crore in cash burn, a company once perceived as mature and stable is being sold in a fire sale.
While there are multiple interpretations to this deal, the most significant takeaway for us as investors is to analyze how Ecom Express and Delhivery evolved over the years and learn the lessons on how companies should—and should not—be managed as they scale. This is a classic case study of business divergence: one company grew to dominate, while the other fizzled out due to poor preparedness.
So, let’s dive in.
The Logistics Sector – A Fundamental Infrastructure.
India’s logistics sector is expansive and multifaceted, with distinct service segments catering to diverse cargo types, client needs, and delivery requirements.
(Source: Delhivery DRHP)
In 2024, the Indian logistics market is estimated at $228 Bn (~₹19 lakh crore) and is projected to grow at a CAGR of 6.5-7.7% in the coming years, driven by the expansion of e-commerce, manufacturing, and significant government initiatives For clarity, our primary focus will be on road transportation.
(Source: Mordor Intelligence, Research & Market, Data Insight Market, ET)
From the above image, one thing should be clear: the industry is intensely competitive across all major segments. Be it FTL (Full Truck Load) and Freight Forwarding, PTL (Part Truck Load), Express Parcel, all segment see intense competition from both domestic and international players vying for dominance.
Moreover, the logistics sector demands significant investment in infrastructure and network development, incurring multiple costs per delivery depending on the delivery type. As a result, profitability varies widely across segments.
(Source: ModorIntel, LinkedIn, ICRA, India Briefing)
Delhivery and Ecom Express: Cut from the Same Cloth
Delhivery – It was founded in 2011 in Gurugram as a hyperlocal delivery service for offline retailers. Quickly recognizing the potential of e-commerce, it pivoted to become a specialist in express parcel and last-mile delivery.
Delhivery’s early investment in proprietary technology for tracking, route optimization, and warehouse management allowed it to scale rapidly and efficiently. By focusing on the underserved B2C e-commerce market and maintaining a tech-first approach, Delhivery positioned itself as a key player alongside Blue Dart and Ecom Express.
Ecom Express – It founded in 2012 by former Blue Dart executives, also targeted the e-commerce logistics space but focused exclusively on providing solutions for online businesses. It expanded aggressively in Tier 2 and 3 cities and rural areas, investing heavily in automation and real-time tracking.
Ecom became a preferred partner for high-volume B2C shipments and achieved profitability by FY19.
Both companies specialized in express parcel delivery, utilized technology to enhance operations, and targeted a fast-growing e-commerce sector. Initially, Ecom Express even appeared better positioned, having achieved profitability.
However, this is where similarity ends and their paths began to diverge.
The Divergence
Delhivery: The Swiss Army Knife of Logistics (B2C Parcels, Freight, Warehousing, Even Drones!)
– It began diversifying beyond e-commerce, adding B2B logistics, PTL, FTL, and warehousing services.
– Invested heavily in technology, automation, and a hub-and-spoke network to support multiple logistics verticals.
– Achieved unicorn status and raised significant capital, fueling further expansion into supply chain solutions, cross-border logistics, and new verticals like FMCG, electronics, and healthcare.
– Beyond 2023, continued to expand its service portfolio, including Q-commerce, rapid deliveries, and multi-tenant warehousing.
– By 2025, Delhivery’s revenue mix: ~62% from express parcel, 19% from PTL, and the remainder from FTL, warehousing, and new services.
End Result
– Achieved profitability in 2024–25, with robust revenue growth and improved margins.
– Built a scalable, tech-enabled network with pan-India reach and multi-segment capabilities, covering over 18,793 pin codes.
– Established a diversified client base, reducing dependency on top e-commerce players (now 39% of revenue; 61% from SMEs and D2C brands) with a strong presence in both B2C and B2B segments and a growing international footprint.
Ecom Express:
– It continued to invest in technology and automation but remained heavily concentrated on e-commerce B2C shipments.
– Built deep partnerships with major e-commerce platforms, becoming a preferred partner for high-volume deliveries.
– Chose not to diversify meaningfully beyond e-commerce, even as the market evolved.
– Became increasingly dependent on a handful of large e-commerce clients (e.g., Meesho, Flipkart), with 84% of revenue from the top 10 customers.
End Result – It built a significant network with a reach to over 2,750 cities, 60+ warehouses, and 50,000 delivery personnel.
This shows that Ecom wasn’t entirely incorrect in its initial decision to focus only e-commerce. However, problems arose when external factors shifted, as they invariably do, and Ecom Express was highly ill-prepared for these changes.
Ecom Express: A Downward Spiral
For Ecom Express, a series of unfortunate events unfolded and everything that could go wrong, went wrong.
Leadership Crisis – In 2023, Ecom’s co-founder and CEO, T.A. Krishnan, tragically passed away, creating a significant leadership void. The board’s decision to appoint Ajay Chitkara (former Airtel Business chief with no prior logistics experience) as the new CEO, with a mandate to accelerate IPO plans instead of promoting from within, proved to be a critical misstep. This decision reflected a short-sighted approach by investors who prioritized IPO timelines over industry expertise. The new CEO’s strategy of slashing delivery costs by 30% severely compromised service quality and infrastructure.
Executive Exodus – Several department heads and CXOs reportedly left the company due to disagreements with the new leadership’s approach. Many of these departing executives took on significant roles at rival logistics companies, including Delhivery.
Meesho Blow: Ecom’s biggest client (52% of revenue), in-sourced logistics in early 2024, becoming a competitor. This single move wrecked Ecom’s volume base.
IPO Shelved: Ecom Express deferred its IPO in 2022 due to market volatility and tried again in mid-2024 under its new CEO. However, Delhivery accused the company of inflating shipment data and hiding costs in its DRHP. Amid multiple controversies, the IPO was never finalized despite favorable market conditions.
Service Deterioration: Following Meesho’s reduction of shipment volumes by 40-50%, Ecom Express struggled to maintain its service quality. Regular delivery delays, fraud issues, and a decline in customer experience were reported by December 2024. Other major clients, including Reliance and Amazon, also significantly reduced their order volumes.
As a result, within a year, the company’s situation deteriorated significantly.
The Current Situation:
By 2025, Ecom Express reported a 30% YoY revenue decline in the December quarter, its IPO was shelved, and layoffs were implemented to stabilize its finances. Reports by March 2025 indicated further financial decline, with losses for the first nine months of FY25 reaching Rs. 398 crore.
Consequently, the board of directors concluded that selling the company was more viable than continuing operations. They decided to sell it to their main competitor and the largest player, Delhivery, in a fire sale. This resulted in significant losses for the latest investors who invested in 2022, including Partners Group (which invested $250 Mn for nearly a 50% stake and took a 71% loss) and British International Investment (a 10% stake, exiting at a 70% loss).
So, Did Delhivery Win?
Yes… but with caveats.
With this acquisition, Delhivery becomes India’s largest player in third-party B2C express logistics. But challenges loom:
– Rs. 300 crore in network integration costs expected over two quarters, attributed to redundant facilities that are under lease lock-ins and the cost of overlapping corporate overheads during the integration period.
– Many of Ecom’s 3,750 facilities (9M sq. ft.) are underutilized; Delhivery must rationalize or exit some assets.
– There’s 100% customer overlap and 95% revenue overlap, meaning no new client base—only volume
– Delhivery has struggled in the past to absorb Spoton (B2B), raising concerns about execution again.
Most importantly: The risk of clients in-sourcing logistics, like Meesho did, still looms large. If this trend accelerates, Delhivery could face the same fate as Ecom.
That’s why the stock dipped 9% post-announcement.
Investor Lessons: What We Should Take Away
If you’ve read this far, you’ve already spotted the key takeaways from this business case.
Ecom Express wasn’t fundamentally wrong in its initial strategy, but it failed to anticipate and adapt to significant shifts in external factors and didn’t establish sufficient safeguards against potential downturns. When those downturns materialized aggressively, the company was ill-equipped to handle them.
Therefore, investors should be vigilant for risks such as high client concentration, potential for clients to become competitors, industry-specific downturns, the appointment of executives lacking relevant industry experience, and a failure to adapt to evolving market conditions, among others.
Instances like this provide a valuable case study for learning and refining our investment analysis frameworks.
Until next time, happy investing.
If you liked this newsletter, don’t forget to share it. Also, feel free to share your thoughts on X, where you can find us as @bastionresearch.
Disclaimer: This newsletter is for educational purposes only and is not intended to provide any kind of investment advice. Please conduct your own research and consult your financial advisor before making any investment decisions based on the information shared in this newsletter.
😂Meme of the Week🤣
Follow us
If you are a diligent investor, you would not want to miss checking out our research platform, where we share insightful research on companies regularly. Gain access to our sample research by clicking on the button below.
