Third-party logistics player Delhivery is looking to drive its next phase of value creation from expanding high-growth businesses, while continuing to improve margins, founder and chief executive Sahil Barua told ET in an interview. The Gurugram-based company, which went public in May 2022, had been the bellwether for the performance of India’s ecommerce industry until the December 2025 listing of Meesho. Barua said that the company was increasingly witnessing vertical ecommerce players and direct-to-consumer (D2C) brands taking away market share from horizontals like Amazon, Flipkart and Meesho. He also spoke about the limits of in-house logistics arms of ecommerce firms, the economics of quick commerce and what being a public company has changed for Delhivery. Edited excerpts:How has life been for Delhivery since listing four years ago?I actually think running a public company is easier than running a private company. Largely because, we take decisions that have medium to long term consequences and they play out over that period. When we went public, we had said that the industry was going to consolidate over a period of time, the margins were going to improve as operating leverage comes in, our focus is going to be on profitability and improving fundamental economics of the business before we start doing anything on growth…and we’re going to start expanding beyond ecommerce. That was the broad story we took to the public markets…and that’s what we’ve been doing for four years. We’ve had a fairly stable base of investors over the past four years and they’ve been supportive of our strategy. Surprisingly, it hasn’t been as stressful as I had imagined. In our business, being an institution as opposed to being a startup is valuable to our customers. Honestly, I don’t miss our private days too much.Also Read: Delhivery investors cash out as stock nears IPO priceHow have you looked at the way the stock has moved in the last four years?We have very limited control over the stock price. Obviously, there are short-term reasons for it to go up or down that are beyond our control. One example is that we had a very strong end to the last financial year. It was the first time in the 15 years I've been here that Q4 was better than Q3. Normally, in our industry, Q3 is the strongest quarter.Most investors believe logistics in India will consolidate and there will be very large companies in this industry. The other thing they look at is execution. People were expecting us to achieve free cash flow breakeven next financial year, but we got there earlier. There are a lot of indicators investors are looking at, and they can see that we've been executing exactly the way we said we would. Beyond that, I can't really worry about the stock price on a daily basis.The market seems to have rewarded Delhivery for becoming profitable. What do you think will drive the next leg of value creation?Value creation in Delhivery will happen from continuing to grow across all of our verticals. Our part-truck load business…when we started out, people said it’s a boring business, which grows at the rate the GDP does and is highly unorganised but we’ve been growing more than 20% a year because that industry is consolidating towards high quality players and the margins are going up. That’s been driving our performance as well.There are also a few verticals that have been underpenetrated. One example is agri logistics, where we’ve done very little but have always wanted to do something in this sector. So we’ll slowly start getting further back in the value chain. We have now started doing what’s traditionally called oversized cargo.For Delhivery, the value creation will come from growth from continuing to expand capacities and the rest of it will come from margin improvement, which fortunately for us, is completely predictable. There are other things that we’ll continue to do, including crunching our working capital cycle, improving cash conversion in our business, bringing capex lower over a period of time, and bringing corporate overheads down over a period of time.Also Read: Exclusive | Quick commerce eating into market share of kiranas, not ecommerce: Delhivery CEO Sahil BaruaDelhivery has been growing faster than the ecommerce industry for the last several quarters. What has led to this growth and what’s the focus going forward?There are a few big trends in ecommerce. First, the market has grown over the last year. We're seeing healthy underlying volume growth across the industry, and it's not just at the lower end. Mid- and premium-tier ecommerce has also been growing strongly.One interesting trend for us has been SME shippers. We hadn't realised how quickly that segment was growing. Earlier, many SMEs relied on local couriers and unorganised logistics providers. Now, with Delhivery Direct, we can see that business has been growing at over 50% annually for the past two years. I don't know if it was always growing at that pace, but what's clear is that it's now becoming a meaningful part of our volumes.Similarly, D2C and vertical ecommerce have become a large and fast-growing business for us. At the overall market level, vertical players appear to be taking share from horizontal marketplaces. Horizontal players still have strong value propositions, especially during major sales events and in categories like electronics. But in segments such as fashion, D2C brands seem to be doing well, and we have high penetration in that space.The third trend is the shift from in-house to outsourced logistics, which we saw over the nine months through March. I think that shift will accelerate because I've never seen a cost environment like the current one. Fuel prices have risen over the last four months, and labour costs are also increasing as revised labour codes come into effect. Those are two of the three biggest cost heads in logistics. As costs rise, more efficient operators will have a greater advantage over less efficient ones. Fortunately, there hasn't been much debate about whether we're among the most efficient, so we see that as a tailwind.The fourth trend is consolidation. We acquired Ecom Express. Around this time last year there were four or five major players in the market. Today, there's one fewer, and those volumes have also contributed to our growth.What do you think will be the number of players same time next year?A lot depends on the appetite of private capital. Once you already have Blue Dart, Delhivery and Shadowfax, all of which have strong competitive positions in our respective segments, it's very difficult for another independent, third-party ecommerce logistics company to survive, whether that's Xpressbees or anyone else.The problem is that there simply isn't enough incremental volume left to capture because the rest of us have already established strong positions. At the same time, costs are rising.So, if you ask me, there's still room for one or two players to exit the market gracefully. If that doesn’t happen and private capital continues to remain invested, the returns on that capital will be negative.Also Read: Delhivery January-March operating revenue jumps 30%; net profit flat at Rs 72 croreThere’s been some pointed commentary between Delhivery and Meesho during recent earnings calls. Why is that?Most people seem to read this as a zero-sum game between ecommerce companies and logistics companies. It really isn't. The more volume we handle, the more efficient we become, and we're able to pass those efficiencies on to our customers. The good thing is that we have a public track record of doing exactly that.We want ecommerce companies to grow. The best way for them to grow is by bringing down their input costs over time.We've always been very clear that ecommerce operates on razor-thin margins. Every rupee they save on logistics is a rupee they can invest in customer acquisition or improving the customer experience.Meesho has its own logistics network, and we understand that. Others are experimenting with in-house logistics as well. We believe there are limitations to that model, though they may continue to run a certain share of their volumes through it.Amazon and Flipkart have done this…they started their own logistics and never went back. How do you solve for the fact that self logistics is something that every large ecommerce company would want to do eventually?The biggest issue is that, at some point, the financial benefits of outsourcing significantly outstrip the perceived control of doing logistics in-house. There isn't a meaningful gap in speed or reliability between in-house operations and what leading third-party logistics companies can deliver. In that sense, the desire for perceived control is often overstated.To some extent, there's also a sunk-cost fallacy. Companies have invested heavily in first-party logistics and feel they need to keep supporting it. But over time, many of these operations have turned out to be heavily loss-making and a drain on resources.At the same time, all of them are expanding into low-value ecommerce. Amazon has Bazaar and Flipkart has Shopsy. Once you start serving those segments, every rupee spent on logistics matters a lot.How do you see ecommerce players entering the quick commerce space after losing market share to 10-minute delivery players?Specific ecommerce segments that are susceptible to quick commerce such as packaged foods, certain electronics, and beauty and personal care have been affected. But quick commerce doesn't really impact low-value ecommerce or fashion, where product assortment is much broader. In those categories, we've actually seen volumes continue to grow at a healthy pace.We’ve consistently said that ecommerce is a 15-20% growth market, and that's broadly what we've seen. Meesho has grown faster than that, while Flipkart has grown a bit slower. On average, though, the market is still growing within that range.For the horizontal marketplaces, the push into quick commerce is primarily about protecting their customer base. They don't want consumers shifting their purchases to platforms like Blinkit or Instamart. These companies are no strangers to grocery. Amazon, for instance, has been in grocery for quite some time. From what I understand, it has performed very well in quick commerce over the last two or three quarters. To me, this looks more like an effort to protect its Prime customer base than anything else.What is Flipkart’s reason…they never really had that consumer base on its platform like Amazon?For them, it's more about protecting its higher-value consumers. I don't think either of them is entering quick commerce primarily to defend their ecommerce business.In fact, our volumes in the top eight cities have grown just as strongly as they have elsewhere in the country.Earlier you’ve questioned quick commerce economics…do you believe the model is proven now with Blinkit showing profitability at its scale?The industry is still subsidising consumers. Once you add up the capital expenditure, the overall economic cost of the business is very high.What's clear is that the consumer need has been created and proven. Blinkit has done a great job of demonstrating that there's money to be made in quick commerce. The bigger question is whether all the players can make money at the same time. It's hard to see how.Once all the costs are fully reflected and the incentives are taken away, it's difficult to know whether demand will remain at the same level.Quick commerce is here to stay, and certain categories will continue to be well suited to it. But can you profitably deliver millions of products to consumers in 15 minutes in an inflationary environment, with real estate costs continuing to rise? That's much harder to see.What’s Delhivery’s play in quick commerce?Over time, we'll do a couple of things. We'll provide warehousing and transportation for everyone supplying into the quick commerce ecosystem. But we don't intend to do the last-mile delivery from a dark store to the consumer because, for the most part, we see that as an undifferentiated capability. We've deliberately stayed away from that business so far.That could change if the model evolves and delivery becomes more efficient through aggregation, clubbing and pooling of orders. It would also become interesting for us if the dark store ecosystem consolidates into multi-platform dark stores serving multiple players. In that scenario, we could participate. But as things stand today, we don't see much of a role for ourselves in standalone last-mile delivery. Our focus will remain on the upstream parts of the supply chain.